Contact 09 421 9020
f
l
TAGS
H

Property Tax

After much debate and pressure from all sides the government made a move in an attempt to slow the overheated property market, particularly in Auckland.

So what does it look like? What will it mean to you? Here are the Key Points:
  • The tax will apply to properties sold within two years of purchase - and will take effect on 1 October.
  • It won't apply to the family home, death estates or properties sold as a part of relationship property settlement.
  • Unlike the current regime, the tax will not rely on proving a seller's intent to make a capital gain.
  • The Government will also require all non-resident buyers and sellers to provide a tax identification number from their home country and to have an IRD number and a NZ bank account.
  • Thursday's Budget will also include $29 Million for IRD to increase its property tax compliance activities.
With $29 Million invested the Government is letting the market know of its intention. However, at the same time the exemption of the family home, deceased estates and relationship property, we are seeing a bit of reason and common sense.

So is this a capital gains tax?

No, it is just a confirmation of the current tax in regards to capital gains from properties sold. This clarification gives a more clearer definition of a speculated property. It removes the vague notion of "intention" to include set parameters around time and motive.

The exceptions?
As mentioned above, your family home, property you inherit or sold as part of a relationship settlement is not regarded as speculative.

What's this about non-resident buyers/sellers?
It's a way of trying to make it a level playing field. Non-residents must have an IRD number and bank account in NZ and must present these on all land transactions. They must also provide tax information from the country the reside. They will be taxed under the same regime as residents. A non-resident is being defined as someone who is not a NZ tax resident or a Kiwi living overseas. The nitty-gritty of how this will be implemented is not yet known.

So what does it mean?

Will this really make a dent in the market? Well the Government will have better data in regards to who is buying and selling thanks to the information required from non-residents. And short term investment will most likely slow in the Auckland market. Like all new policy, it is watch and see.

If you have any questions about these changes, please give us call on 09 421 9020.