A hallmark of NZ’s taxation system has long been the absence of a Capital Gains Tax on the sale of property, but is that strictly still the case?
A new client of mine is upset about having to pay tax at 39 percent on the sale of a property, saying that when he immigrated here he was told NZ doesn’t have a Capital Gains Tax (CGT), such as you might find in Australia.
Is he correct, does NZ have a CGT on property? In this article, I’ll explore the concept of taxation on the sale of properties, including nine ways you can get taxed on its sale even if you’re not using it for business or to rent out to tenants.
Keep in mind, while none of these situations may apply to you now, they’re handy to keep in mind for the future, should your situation change.
1. Building a new house
You’ve always wanted a new house so you buy a section. Under the new rules, if it takes you longer than a year to build and move in, then the apportioned gain on sale over the time before you move in will be taxable. The real gotcha is, as far as I can tell, there’s no way you can get consent and build a house in less than a year in NZ, it just cannot be done.
