Is my daughter liable for tax?

Question from Yang Shien updated on 13th May 2011:

I am a foreigner who bought a house in Sandringham. The house has two units. One unit I rented to my daughter who is a NZ citizen. Now I am considering renting out the other unit. However, I am concerned that my daughter will need to pay for the tax at the year end since this house was registered under her name. So my question is do we have any solution to prevent my daughter to pay the tax that she should not pay for?

Our expert Mark Withers responded:

If your daughter is the registered and beneficial owner of the property and has rented the property she is liable for tax in NZ on the net rental income. If your daugher is holding the property on trust for you then you are liable for tax in NZ on the rent your daugher pays you plus the rent from the other unit. Despite being non resident you are still liable for tax in NZ on income derived in NZ.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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