New Zealand’s tax on residential property acquired after 1 October 2015, held for less than two years, and which is not an owner’s main home, nor acquired through inheritance or relationship settlement has been enacted in the Taxation (Bright-line Test for Residential Land) Act.
The enactment follows other recent changes to rules requiring buyers and sellers of residential property to provide information at the time of the transfer of residential property to be passed to Land Information New Zealand for the purpose of tracking taxable land transfers and dampening the white-hot Auckland property market.
‘We should be clear that the current ‘intention’ test will remain after the two year period. This means that when someone buys a property with the intention of making a profit they must pay income tax on that gain’ stated Revenue Minister Todd McClay in his statement to media.
New Zealand rules have to date held gains as taxable on any property held with the intention to make a profit, however difficulties around this principle – notably with proving a taxpayer’s intention at the time of purchase – have led, amongst other issues, to the new Bright-line test.
Gains will be taxable at ordinary income tax rates – 16 November 2015.