Tax obligations
We have had IRD representatives come into the office at Turangi and dropping off pamphlets about “I have bought and resold at a profit. Do I have to pay tax “It depends on your reason or intention at the time you bought the property, it states in the pamphlet.
We are indenting that some people bought investment property on a negatively geared setup , that’s fine to a point , but when interest rates rise , their own income ( business ) slips and the property begins to require deferred maintenance or money spent on it , then the holding cost becomes too great , and its time to sell. The intention was not to sell, but economics dictated that it is a sensible decision to do so. In that case I would ask that you talk to your accountant prior to selling.
We have plenty of copies of these phamplets if you want one , The IRD says they are chasing $100 million , and if you have sold a rental property for profit or done it on your own home 2-3 times , then you may need to get an answer sorted out.
http://www.ird.govt.nz/toii/property/prop-tax-decision-tree-resale.html
Your reasons for buying your property are important
When deciding whether or not you should pay tax on the profit from the sale of a property, we look at your intention when you bought it.
A good test is to ask yourself "What were my reasons for buying this property"
If ... then ...
you intended to sell the property when you bought it
it is likely your profits are taxable.
you bought the property intending to make a profit
it is likely your profits are taxable.
you bought the property as your family home
it is unlikely your profits are taxable.
To work our your intention we listen to what you tell us and look at your actions. We might look at statements you made to a bank manager or advisor when you bought the property, and at any plans made or discussed at the time.
Everyone's circumstances are different and we consider all the facts on a case by case basis.
If you are still in any doubt you should seek professional advice.
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