Buying, selling or transferring New Zealand property changes from 1 October 2015

An amendment to the Land Transfer Act 1952 will require vendors and purchasers in a property transfer transaction to provide a tax statement. This applies to all interests in land, e.g. fee simple, leasehold and licence to occupy. This will apply to your trust when you are buying and/or selling land. This is something that your lawyer should prepare and advise you on as part of the conveyancing process.

The tax statement requires details of the property, the buyer/seller, non-notifiable transfer reasons (where an exemption from providing tax details applies), tax details at the date of the statement (including NZ IRD number) and signature.

You can claim an exemption from providing tax details if:

  • The property being transferred qualifies as your ‘main home’;
  • The property is being sold due to a mortgagee sale, rating sale, Court ordered sale or statute ordered sale;
  • You are transferring the property on behalf of a public or local  authority (as defined in the Income Tax Act 2007);
  • You are acting as executor/administrator of an estate.

The ‘main home’ exemption applies if the property is mainly used as a residence by you and your family, and you have the greatest connection to it if you have more than one home. The ‘main home’ exemption cannot be used if the vendor/purchaser is not a natural person and this includes trusts.

Also offshore people and entities will need to supply a New Zealand IRD number and a taxpayer identification number from any country where they currently have to pay tax on worldwide income.  To apply for a New Zealand IRD number you must have a fully functional New Zealand bank account.

For a trust, the IRD number needs to be the trust’s IRD number, not the trustees personal IRD number. We understand some trusts do not have an IRD number and so this is something that needs to be considered in advance so as to ensure any purchase/sale of property is not held up due to the need to arrange an IRD number. Our tax team can organise this for you.

For more information see  www.ird.govt.nz/propertychanges or contact the Trust team.

 

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