Trusts and residential property sales

Posted by: Sara Fenwick
Date: 09 December 2016

New information is required by the IRD for buying, selling or transferring New Zealand Property excluding the main home.  You'll need to provide the IRD with an IRD number or a Taxpayer Identification Number (TIN) from any overseas country where you have to pay tax on your income…. something you may have overlooked?

Entities such as a trust, that owns a residential property and enters into a sale and purchase agreement could come under new rules and be subject to paying income tax if they sell the property within two years.  Residential properties acquired and disposed of after 1stOctober 2015 for New Zealand citizens and residents will be subject to the Bright-Line Rule. 

This rule means you'll pay tax on income earned if you buy and sell a house within two years.  Unless you're selling your main home or another exemption applies.  BUT! There is a catch to this rule too…. You can only use the main home exemption twice over any two-year period, any more than that and you're no longer eligible for the main home exemption.

Do you have questions on the new Bright-line rules?  Or do you need to apply for an IRD number?  Give us a call 03 578 3386 or you can email us askme@tva.co.nz - we can help.


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