New Zealand Clarifies Tax on Capital Gains
May 18, 2015 Taxation in New Zealand
WELLINGTON – New Zealand is enacting new rules to ensure that the profits of property investors are properly taxes, and that foreign investors cannot sidestep their tax obligations.
Over the weekend the government of New Zealand announced that the tax legislation regarding the taxation of profits from the sale of housing, with the intention of bringing more property investors under the tax net.
Under the new rules, any profit raised from the sale of property sold within two years of the initial purchase will be taxed at the seller’s own marginal tax rate.
The new conditions will not be applicable to sales where the property is the primary residence of the seller, inheritance, or any property that has been transferred as part of a relationship property settlement.
The new rules are intended to slow down the rampant housing market in New Zealand, especially in Auckland, which is currently regarded as overheated.
In addition to the taxation rules, it was also announced that any foreign investor looking to purchase property in the country to provide an IRD number for the purchase, with a further condition that non-residents will need to have a local bank account in order to receive an IRD number.
The new regulations concerning overseas residents are intended to ensure that foreign investors are not able to skip the tax obligations arising from profits earned in New Zealand.
Photo By: xiquinhosilva