New Zealand Introduces New Property Tax Rules
August 26, 2015 Taxation in New Zealand
WELLINGTON – Property investors in New Zealand will no longer be able to sell properties without paying taxes on their incomes.
On August 24th a new Bill was introduced in New Zealand proposing tougher rules on the taxation of income garnered from the sale of property.
The key feature detailed in the Bill is the introduction of a “bright line” test, which would require taxpayers to pay income tax on any earnings made from the sale of property, if that that property has been held for less than two years since the time of purchase.
The only exception to the proposed rule is for homes which are the primary residence of the seller, or homes which were received as part of an inheritance or a relationship settlement.
The new rule will also not apply to commercial property and farms.
The bright line test does not add any new tax obligations for property sellers, but reinforces the current regulations regarding taxation, which state that if a property was purchased and sold with the explicit intention of drawing a profit, then income taxes will apply.
It was specifically noted that the new rules will apply to taxpayers from New Zealand and overseas, as currently there is significant controversy and speculation regarding the role of foreign investors in the escalation of property prices in New Zealand.
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