You will no doubt have noticed a constant barrage of news concerning the rise in the property market, in particular Auckland. The Government has attempted to hold back the tide by adopting some new measures.
Firstly, from 1 October 2015 a Land Transfer Tax Statement has to be completed for every property transfer. These statements collect property details, seller/buyer identity and tax information. This has enabled the Government to compile statistics regarding who is buying and selling and whether they are local New Zealanders or overseas persons.
Secondly, a ‘bright line’ test has been introduced. This test provides that if residential property is purchased after 1 October 2015 and sold within two years of acquisition there will be tax to pay on any profit.
The third change is the introduction of a residential land withholding tax. Where there is tax to pay under the ‘bright line’ test and the vendor is an overseas person or entity, the lawyer acting for the vendor must withhold the lesser of 10% of the sale price, or the sale price less the purchase price times 33%, or the sale price less loans and outstanding rates.