Buying or selling a house? One thing you should know

 

If you’re buying or selling residential property, we’re required to provide the IRD with an IRD number.

BuyingSelling.jpgWhy? This is part of their new bright-line test. Income tax will be imposed on any gain from residential land bought or sold within two years – that’s land with or without a dwelling on it.

Any exceptions? Yes. If it is your main home, the place you use predominately to live in, you’re excused. (But you can’t buy and sell a main home within two years two or three times thereafter…) Ditto if it is a transfer under a relationship property agreement, where your relationship has broken down. It also won’t apply if it is a transfer following a death to an executor, administrator or beneficiary, but see us for all your legal advice around these things.

What about my workshop or office? At this point, the bright-line test only applies to residential land and dwellings. Land that’s used for business or industry (ie forestry, horticultural and pastoral businesses) are excluded from this. 

How does it affect my home(s) owned by my trust? Talk to us about this directly and we can give you an answer based on your individual circumstances.

So what do I need to do again? Make sure you give us your IRD number for any residential property purchase or sale you make. If you’re purchasing using a trust, you’ll need an IRD number for that trust – it pays to apply early because that can take a while.

 
 

We’ve just given you a top-level explanation here but phone the Rice Craig office on 09 295 1700 to be put through to one of our helpful lawyers who can run through what the bright-line test means for you.

 
 

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