Tax Bill Takes Aim at Offshore Property Speculators
The Residential Land Withholding Tax (RLWT), GST on Online Services, and Student Loans Bill has passed its first reading.
The Bill proposes a new withholding tax on sales of residential property by people who live overseas and go on to sell the property within two years of purchase and is the third part of the suite of measures of investment property tax reforms announced as part of Budget 2015.
It introduces a collection mechanism for the new bright-line test, which applies to gains from the sale of residential property purchased on or after 1 October 2015 and sold within two years.
RLWT will apply when the property being sold is located in New Zealand and defined as “residential land” under the bright-line test provisions, the seller is an offshore person, bought the property on or after 1 October 2015, and has owned the property for less than two years before selling it.
The RLWT rules are effective 1 July 2016.