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If you're a withholder you'll deduct residential land withholding tax (RLWT) for the offshore RLWT person.

Your role within the process is done when the RLWT is paid to us.

Check if RLWT should be deducted from the property sale

You'll need to deduct RLWT from the property sale profit if the:

  • sale amount is paid or payable (excluding deposits or part payments that total less than 50% of the sale amount) on or after 1 July 2016
  • property disposed of is New Zealand residential land 
  • seller is an offshore RLWT person and they acquired and sold the property within the bright-line period.

The bright-line period is:

  • 10 years for property acquired on or after 27 March 2021 or 5 years if the entire property qualifies as a ‘new build’.
  • 5 years for property acquired as a result of an offer made on or before 23 March 2021 and that offer was not able to be revoked or withdrawn before 27 March 2021.
  • 5 years if you acquired the property between 29 March 2018 and 26 March 2021.
  • 2 years if you acquired the property between 1 October 2015 and 28 March 2018.

New builds

For properties acquired on or after 27 March 2021, where the residential land has a new build and a non-new build on the same legal title, RLWT applies to the full sale price if it is sold within 10 years.

Qualifying for the 5-year bright-line period for new builds

Bright-line property rule is changing from 1 July 2024

For properties sold on or after 1 July 2024, the bright-line property rule will only apply if the property is sold within 2 years of purchasing it.

Changes to the bright-line property rule

How to check if RLWT needs deducting

You cannot deduct RLWT without a signed residential land withholding tax declaration - IR1101 and supporting documents from the seller. You'll need the same for companies, trusts and limited partnerships.

When the seller does not give an IR1101 form

If the seller does not give you an IR1101 or it's incomplete, assume they're an offshore RLWT person. They'll need to meet other withholding requirements.

This means you deduct RLWT from the residential land purchase amount. This will ensure you avoid any penalties as the withholder.

Deduct RLWT before any other payments

You'll need to calculate, deduct and pay RLWT to us before any other payments are made. The only exceptions are payments to cover:

  • any mortgage or other security with a New Zealand-registered bank or licensed non-bank deposit taker against the property
  • outstanding local authority rates.

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Last updated: 01 Apr 2024
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