New Zealand is a great place to buy property. It’s especially desirable among investors because there is no formal capital gains tax. However, it does need to be noted, that there is a slight variation of capital gains called the bright-line property rule, which this post will explore in more detail later on.
If you are interested in buying property in New Zealand then it’s important that you take time to learn about the country’s tax rules. This post will cover them, as well as offer some advice for buying your first bit of property there.
Bright-Line Rule
As mentioned in this post’s introduction there is a variation of capital gains tax in New Zealand. A lot of investors are under the impression that you get to keep all of the profit you make from property sales there, but that’s not always true. If you are planning on buying and holding real estate in New Zealand then the Bright-Line rule is not necessarily something you need to worry about. However, if you are planning on buying and then trading it, it is worth researching.
The definition of Bright-Line is that if you sell residential property you have owned for less than 10 years, you could have to pay income tax unless an exclusion applies. If you are interested in learning about exclusions then it’s a good idea to reach out to a realty company or lawyer. It’s much easier to get advice from a professional than it is to research New Zealand’s Bright-Line rule online.
Regional Taxes
While the bright-line rule does make investment a little more complicated, something that’s worth noting is that New Zealand has no regional taxes. This means that you do not have to pay tax to a council or authority simply for owning your house. The same is not true in places like America, Australia, and the United Kingdom. Regional taxes can be very expensive in these places. While exemptions do apply and there are ways around regional taxes in places where they exist, they can still be stressful to deal with. In New Zealand, you never have to worry about them.
Property Fees
The only fees associated with buying a house in New Zealand come from the realtors, solicitors, and surveyors employed in the property transfer process. If you are planning on buying real estate there then you can save money by finding an affordable solicitor and surveyor. If you are buying property with a mortgage then try to find a lender that offers free surveys. It is very common nowadays to find mortgage packages with free surveys. A free survey will save you a lot of money.
Buying Property
Finding Realtor
If you want to go ahead and buy property in New Zealand then the first thing you need to do is to find a realtor to work with, especially if you are not from the country. If you are not from the country then there is no way that you’ll be able to navigate the nation’s complex property market alone. A realtor will be able to search for property on your behalf, sending you information about anything that conforms to your interests or requests. Make sure to read your chosen realtor’s reviews before committing and hiring them.
Land Survey
A land survey is a good idea too. In some places, land surveys are mandatory, meaning you cannot buy a house until you have had one done. Even if your mortgage lender is not requiring you to have a survey performed it’s still good to get one done. A survey will check for any boundary disputes or anything that could become a problem later on. Land surveys are a good way of settling your mind and allaying any fears you have about your prospective purchase. Ensure that you hire a qualified, experienced, and respectable surveyor.
Developing Land
One good way of making money from real estate is to buy land and then build houses or apartment buildings yourself. If you’re interested in investing in property in New Zealand then this could be a good way of maximizing your profits. You can make hundreds of thousands of dollars in profit by developing New Zealand land.
There is a demand for housing right now, so you’ll likely get any planning permits approved quickly, as long as you can show that you have the means to complete your project. Ensure that you hire a quality construction company to complete the build for you.
New Zealand is a good place to buy property. The nation’s property market has gone from strength to strength in recent years. Read through this post and make sure you learn about the nation’s tax laws before going ahead with a purchase.
