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If you're buying residential property, make sure you know what your tax obligations will be when you come to sell the property.
Things you need to know
As a general rule, if you're buying a property with the intention of selling it, you will probably have tax to pay on any profit you make. There are different rules associated with buying a:
It's important that you think carefully about your intentions when you first agree to buy a property because this will determine your tax situation when you come to sell. Also, if you buy and sell a property within five years, (two years if you purchased the property on or after 1 October 2015 through to 28 March 2018 inclusive) you'll pay tax on the income you earn from the sale. This is regardless of your intention at the time of purchase. A withholding tax may also be deducted at the time of sale.
If you're in the property industry (for example you're a builder, developer, a dealer) or associated with someone from within the industry, then you'll be subject to different rules as well. We recommend you get professional advice from a tax advisor.
When buying property you will need to provide information to your property lawyer or conveyancer. This may include your IRD number and taxpayer identification number (another country’s equivalent of an IRD number) if you have one.
If you're buying a rental, you also need to know your tax obligations while you're renting out the property.
Related products, services and links
- Residential land withholding tax
- Property tax compliance requirements - LINZ website
- Register for myIR to manage your tax and entitlements securely online
- QB 17/02: Income tax - Date of acquisition of land, and start date for 2-year bright-line test
- QB 15/13: Income tax – whether the cost of acquiring an option to acquire revenue account land is deductible
- QB 15/04: Income tax – whether it is possible that the disposal of land that is part of an undertaking or scheme involving development or division will not give rise to income, even if no exclusion applies