Rule and exception dating
You’d have to pay tax on any profit you make from the sale of a third property in two years because you would not be eligible for the main home exclusion. If you live in more than one house, your main home is the one that you have the greatest connection to. Am I eligible for the main home exclusion if I sell it? However, if you go on to sell this property within the bright-line period for this property, the relevant bright-line rule will apply. How and when do I pay the tax I owe on income I’ve made from a property sale?You’re also not eligible for the main home exclusion if you show a regular pattern of buying and selling residential property. Who decides if the main home exclusion applies to me? You’ll find the criteria for deciding which property is your main home listed above. Residential properties held in trust can use the main home exclusion under the bright-line rule if: The principal settlor of a trust means the settlor whose settlements to the trust have been greatest by market value. Before you pay the income tax you owe on your property sale, you’ll need to complete an income tax return. What happens if I make a mistake on my income tax return? If you get something wrong on your income tax return, we encourage you to let us know as soon as possible so that we can help you get it corrected. Find more information on how to put your tax returns right if you make a mistake. What happens if someone does not include their property profit on their income tax return when they should?There are two common uses for list-modification rules: reducing an approver's signing authority, and extending an approver's signing authority.In the former case, the list-creation rules might effectively grant a certain level of signing authority to managers having a given job level, and you might want not to grant that authority to a certain manager, in spite of their having the requisite job level.It says you’ll pay tax when you buy and sell a residential property within five years, unless an exclusion applies. The bright-line rule applies to the sale of any residential property you’ve bought on or after 1 October 2015 as follows: But whenever you buy a property intending to resell it, you’ll need to pay tax on any profit you make when you sell that property. If the property is in another country, the bright-line period starts on the date the transfer was registered under that country’s laws. The bright-line rule only applies to residential property.It’s easy to know if this rule applies in your situation. So even if the bright-line rule does not apply in your situation, that does not necessarily mean you will not need to pay tax on your property profits. Different dates apply if you sell the land before your purchase was registered with LINZ or if you bought the land because of a subdivision of property (for example as a sale “off the plan”). A property is not residential if it’s mainly used for business or as farmland.Talk with your tax advisor if you need more information about this. What if I sell my property after the relevant bright-line period has ended for me? If you sell a property outside of the relevant bright-line period for you, the bright-line rule will not apply to your property sale. The intention test says you must pay tax on property profits if you originally bought a property with the intention to resell it. If you owe income tax on another residential property sale in the future, you can subtract these “ring-fenced” property losses from the income you earned on this later sale. How will earning extra income, for example from property, impact these? If you’re a New Zealand tax resident who earned income selling a property in another country, you may need to pay tax there.If your income changes at all during the year, it could impact how much: Let us know whenever your income changes to make sure you pay or receive the right amount and avoid getting into debt. You’ll also include it on your New Zealand income tax return and pay any tax. Does residential land withholding tax apply to my property sale?
To be eligible for the main home exclusion to the bright-line rule, you need to have used a property as your main home for more than 50% of the time that you’ve owned it.
You also need to use more than 50% of the area of the property as your main home.
(The area that counts as your main home generally includes things like your yard, gardens and related buildings like the garage.) This is an important point if you rent out a granny flat attached to your house or part of your house is used as a business.
As an example, if you use 40% of a property as your home and 60% as a rental property, you cannot use the main home exclusion if you sell that property.
If you live in more than one property, you’ll need to decide which is your main home.