Bright-Line Property Rule Now Law 

 
Grange Associates Ltd - 18 January 2016

This new rule applies to residential property bought on or after 1 October 2015.  It requires people who sell residential property within two years of purchase to pay income tax on the sale unless:

• It is their main home
• They inherited the property
• They receive the property as part of a relationship settlement

All existing property taxation rules, such as the intention test, still apply.  The bright-line rule only applies to residential property, business premises and farmland are not subject to this rule.

New information requirements

When buying, selling or transferring New Zealand property, excluding their main home, taxpayers will now need to provide:

• Their IRD number 
• Taxpayer Identification Number (TIN) from any overseas countries where they have to pay tax on their worldwide income, if they have one

This information will need to be provided to their property lawyer or conveyancer. 

Returning property income

This will continue to be returned as “other income” in the income tax return.

In addition, a new form “IR833 Property Sale Information” will also need to be completed and submitted with the income tax return.

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