New Property Tax For New Zealand Expats

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Overseas home owners and investors are likely to face new property taxes if a new bill is approved by the New Zealand parliament.

Residential Land Withholding Tax (RLWT) applies to anyone living overseas who sells a home in the country within two years of purchase.

The law is aimed at discouraging speculative investors from overseas buying affordable homes ahead of New Zealand nationals.

However, the tax net is wide-ranging and takes in anyone who is:

  • Not a New Zealand citizen
  • An expat without residence visas
  • A New Zealand citizens or expat with a residence visa who have lived outside the country for some time – up to three years for citizens abroad

How Residential Land Withholding Tax works

The bill before MPs is expected to come into force from July 1, 2016 and will apply to all homes bought on or after October 1, 2015 which are sold within 24 months of purchase.

The tax will apply to all residential properties as the government considers no one living offshore will have a home on the islands, so will not qualify for any main residence exemptions.

Properties that change ownership following the death of an owner are exempt from the tax.

The law calls for the owner’s lawyer or agent in New Zealand to withhold any taxes due before disbursing the sale proceeds.

Revenue Minister Todd McClay explained the new bill is the third and final part of the ‘bright line test’ for taxing the gains on sales of residential property.

Finding out if you should pay Residential Land Withholding Tax

“The tax proposal comes in alongside altering the way tax is collected on property sales and how the government maintains information about property owners and transactions,” said McClay.

“The aim is to make sure everyone pays their fair share of tax on any profits they make from buying and selling homes.”

The Residential Land Withholding Tax regulations are complicated, so the New Zealand government has published a number of flow charts and guidance booklets online.

The guidance includes detailed definitions of who pays the tax and property that falls under the law.

The guidance is available on the New Zealand Revenue Department web site

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