Property

Landlords warned: IRD is watching

Investors are being warned not to expect to be able to dodge capital gains tax just by holding on to their properties longer than two years.

Friday, November 13th 2015

The "bright-line test" was passed into law yesterday, requiring property investors to pay tax on gains made on properties they bought and sold within two years.

Revenue Minister Todd McClay said it was an important tool ensure property speculators paid their fair share of tax.

The measures will require income tax to be paid on any gains from residential property purchased on or after October 1 this year and sold within two years.
The exceptions are an owner’s main home, inherited property, and the transfer of relationship property.

McClay said that did not mean investors who held a property for longer than two years would automatically be in the clear for tax purposes.

"We should be clear that the current ‘intention’ test will remain after the two year period. This means that when someone buys a property with the intention of making a profit they must pay income tax on that gain,” he said.

“The proposals in this bill, together with recently enacted rules requiring buyers and sellers of property to provide an IRD number, and non-residents to also provide the foreign equivalent of an IRD number and a New Zealand bank account number, will help Inland Revenue to better identify investors in New Zealand’s residential property and ensure they pay their fair share of tax on gains from property sales."

McClay said IRD would be watching transactions and would be able to enforce income tax rules on people who tried to avoid their obligations outside the two-year period.

"“We have provided IRD with $29 million out of Budget 2015 to focus on property tax compliance. In total, they have $62 million in funding over five years, which is expected to generate an additional $420 million of tax revenue.

“As a result of this investment, as many as 100 compliance officers will undertake this important work."

Comments

No comments yet

Most Read

SBS FirstHome Combo 4.29
Unity First Home Buyer special 4.29
Co-operative Bank - First Home Special 4.85
China Construction Bank 4.85
ICBC 4.85
TSB Special 4.89
Kiwibank Special 4.89
ASB Bank 4.89
Westpac Special 4.89
BNZ - Std 4.89
AIA - Go Home Loans 4.89
Nelson Building Society 4.93
ICBC 4.95
SBS Bank Special 4.95
China Construction Bank 4.95
Wairarapa Building Society 4.95
TSB Special 4.95
ANZ Special 4.95
ASB Bank 4.95
Kainga Ora 4.95
Westpac Special 4.95
AIA - Go Home Loans 4.95
SBS Bank Special 5.39
Westpac Special 5.39
ICBC 5.39
Co-operative Bank - Owner Occ 5.59
BNZ - Std 5.59
BNZ - Classic 5.59
AIA - Go Home Loans 5.59
ASB Bank 5.59
Kainga Ora 5.69
Kiwibank Special 5.79
ANZ 5.79
SBS Construction lending for FHB 3.94
AIA - Back My Build 4.44
CFML 321 Loans 4.99
Co-operative Bank - Owner Occ 5.95
Co-operative Bank - Standard 5.95
Heartland Bank - Online 5.99
Pepper Money Prime 6.29
Kiwibank - Offset 6.35
Kiwibank 6.35
TSB Special 6.39
ASB Bank 6.44

More Stories

Four decades of 6-7% yearly house price growth ending

Friday, March 21st 2025

Four decades of 6-7% yearly house price growth ending

New Zealander’s reliance on property capital gains in the mid-single digits is at an end.

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

Friday, January 31st 2025

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

It’s been years in the making and former real estate agent Mike Harvey is now coming to market with his platform matching buyers and sellers, an offering he says will be a gamechanger for the industry.

Leaving last year's stumbling housing market behind

Friday, January 17th 2025

Leaving last year's stumbling housing market behind

As interest rates ease and job losses climb, New Zealand’s housing market faces a mixed year of modest growth, with conflicting forces shaping the outlook for homebuyers and investors.

Don’t bet on house prices rising faster than incomes

Wednesday, January 15th 2025

Don’t bet on house prices rising faster than incomes

Former Reserve Bank Governor and National Party leader Don Brash says there are grounds for believing that house prices may finally have ended the three-decade period when they rose significantly faster than incomes.