What tax should you be paying?
The tax you should pay will depend on whether you are a residential rental investor or a dealer in residential rental properties.
Owning rental property doesn't mean you are automatically exempt from paying tax on the sale of rental properties.
- Residential rental investor
- Residential rental dealers and speculators
- Income tax
- Provisional tax
- Property partnerships
- Goods and services tax (GST)
Residential rental investor
Rental investors must pay tax on rental income they may earn from the properties. GST does not apply to residential rental income.
Residential rental dealers and speculators
Rental dealers and speculators must pay income tax on any gain they make from reselling their property. They must also pay tax on rental income they may earn from the properties. GST does not apply to residential rental income but does apply on the dealer or speculator income.
Find out more about the adjustment required in unplanned rental income
Find out more about:
- when does rental investment become rental dealing
- mistaking property dealing for property investment
Income tax
As an individual or as a partner in a partnership, you'll need to send us an Individual tax return (IR3) each year, or an Individual tax return - non-resident (IR3NR) if you live overseas. Partnerships will also have to file an Income tax return - partnerships (IR7) return.
Individual tax return - non-resident (IR3NR)
Income tax return - partnerships (IR7)
You'll need to include enough information to show how you worked out the amount of property income you've calculated after deducting expenses.
Add the profit to any other income you've earned to calculate your total taxable income.
You can then work out the tax on your total taxable income. Deduct tax credits, eg, PAYE, from the tax total.
Most people will have a tax year that ends at 31 March each year. Tax to pay is due by 7 February the following year (or 7 April if you have an agent with extension of time status).
If you don't already send us a tax return each year, you can complete an IR3 return online, or call us on 0800 227 774 and we'll send you one at the end of the year. The number for overseas callers is +64 4 978 0779.
Provisional tax
Taxpayers with annual tax to pay of more than $2,500 are required to pay provisional tax.
Provisional tax isn't a separate tax - it's another way of paying your tax as you earn your income. You usually pay three instalments throughout the year to cover your expected end-of-year income tax.
Find out more about provisional tax.
Property partnerships
If you're in a partnership of two or more people, the partnership will need to get an IRD number by completing an IRD number application - non-individual (IR596) form.
IRD number application - non-individual (IR596)
The partnership will only need to keep one set of accounts to record its income and expenses and file an Income tax return - partnerships (IR7) each year.
Income tax return - partnerships (IR7)
This return will show how the income was calculated and the amount of each partner's share.
If a couple (ie husband and wife, civil union or de facto) is buying and selling or renting property, you don't need a partnership IRD number or IR7. Each partner includes a copy of the accounts in their individual tax returns and includes their share of the profit or loss from the property activities.
Goods and services tax (GST)
GST is a tax on the supply of most goods and services in New Zealand (although among other things excludes residential rentals). GST can apply to people who buy and sell property.
You must register for GST if your annual turnover in the previous 12 months was more than $60,000 (or is likely to be in the next 12 months). Turnover is the total value of supplies made for all your taxable activities, excluding GST.
Date published: 30 Jul 2010
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