SearchSelling up taxes
Natasha asks:
(updated on Friday, December 14th 2018)
We have a property in Manurewa with an existing loan of $80,000. It is currently rented out. We have owned it for over 10 years and it was purchased for retirement savings. We also own a property in Meremere which has a mortgage of $280,000. We have owned this for one year and it is also currently rented out.
But we are thinking of selling the Manurewa property and repaying the debt on our own house. Neither properties have been depreciated, or set up as a partnership, or property managed. We are NZ residents. We want to know more about whether there are any taxes payable on any profits if we do decide to sell?
Our Experts Answer:
Provided the property was not acquired with an intention to dispose of it originally and provided it hasn't benefited from a zoning change in the last 10 years the gain should be free of tax. Even if you are associated with a dealer or developer of land a 10 year hold after acquisition would see tainting risk drop away.
It is interesting that you have not depreciated the property as you acquired it at a time when buildings were depreciate. If you wished not to depreciate it a written election was required to be made with IRD and in the absence of an election IRD can still assess recovery of the depreciation that should have been claimable! That said, I have not seen this imposed in practice.
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