Government Proposes Offshore Property Withholding Tax
August 31, 2015 New Zealand Taxation
The government is cracking down on property speculation by foreign investors by proposing a withholding tax on such sales.
On August 31st the Inland Revenue Department released an issues paper on proposed new rules for collection income taxes for profits obtained by offshore residents selling property in New Zealand.
Under the proposed rules, foreign sellers will face a withholding tax when selling property, with a portion of the sale proceeds to be held by a lawyer, or conveyance agent, to be remitted to the IRD.
The amount to be withheld will be the lower of 10 percent of the sale price, or 33 percent of the sale price minus the original purchase price.
Some concession will be made if losses are incurred by the seller due to improvements made to the home.
The proposed withholding tax is not a new tax, but a system of collecting the income taxes owed when making a profit when selling a home, and is intended to work coherently with the government’s recently proposed “bright-line test”.
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