The taxation bill containing changes to the taxation of residential property has now been enacted and all that is left to do is for taxpayers to understand and implement the rules. While opposition parties have stated that these rules will be repealed if there is a change of Government at the 2023 election, at a minimum these rules will have effect for at least 2 tax years and they can’t be ignored.
There are two main sets of rules that taxpayers need to be aware of:
Before explaining the rules, it’s worth noting that Inland Revenue collects extensive amounts of information about residential property (including details of rental property expenditure and property sale information), so property owners should take compliance with these rules seriously. It is not a question of if, but when, Inland Revenue will be coming knocking to check on compliance with these rules.
The following is a high-level summary of the rules; however readers should note there are some detailed in’s and out’s for certain circumstances which are not covered in this article. Given the quantum of tax that can be at stake when dealing with residential property and the complexity which now exists in these rules, it is worth seeking professional advice to confirm how any tax rules applies.
What is DRP |
What is not DRP |
---|---|
Land in New Zealand to the extent it:
|
Land outside New Zealand:
|