Often driven by price, this is a service where you really do get what you pay for. The transferring of the legal title of property from one person to another involves a large value item, your home. The implications of such a large value transaction are too important to you and your family to not have the correct representation.

We aim to provide clients with expert and strategic advice in all aspects of residential, commercial and property development. Our clients range from residential to corporate, property developers, property investors, financiers and landlords/tenants.

Residential property lawyer

Buying or selling a property? Our residential property conveyancing includes:

  • Sales and purchases

  • Mortgages and refinancing

  • Cross-leasing and unit titles

  • Multi-unit apartments

  • Property sharing agreements

  • Ownership structures

  • Asset protection schemes including relationship property agreements and family trusts

  • Wills and estates

  • Real estate agency issues including commission disputes

  • Auctions

  • Leaky homes

New residential land tax rules

New Bright Line Test for residential land sales

What does “Bright Line Test” mean?
A bright line test sets a basic standard with little or no room for varying interpretation.

Who will it affect?
Buyers and sellers of residential land, that is, land that has a home on it or is capable of having a home on it. This does not include land used for business premises or farmland.

When could buyers and sellers be affected?
From 1 October 2015 a buyer or seller of residential land may be required to pay income tax on any gain they derive from a disposal of residential land (in New Zealand or outside New Zealand) that is acquired and disposed of within two years.  There are certain exemptions eg. a person’s main home can be sold tax free.  

What is a “main home”?
A main home is property which is used predominantly for a dwelling (generally requiring 50% or more use as a person’s residence).  Where people have more than one home then the exemption would apply to the home in which they have the greatest connection.  

When may an exemption not apply to a main home?
A main home exemption cannot be claimed if the property is owned by a company, offshore person, or the exemption has been relied on at least 2 times within the 2 years preceding the date of transfer.  The trustees of a trust may in certain circumstances claim a main home exemption (see below).

Here’s an example of how the bright line test would work:
Bonnie and Clyde purchase an apartment as an investment property under an agreement dated 20 October 2015.  Settlement of the purchase takes place on 20 November 2015.  They then decide to sell the property to take advantage of an increase in property values and enter into an agreement for sale on 30 June 2016. Bonnie and Clyde will be caught under the bright-line test as they have sold within two years of purchasing the property - the start date is the date the transfer of the property is registered and the end date is the date that they enter into an agreement to dispose of the property (seven months).  They cannot claim a “main home” exemption because they do not reside at the property and the property is tenanted.

What are the implications for Trusts?
It is important to note that Trusts will require IRD numbers in order to dispose of or purchase residential land. A “main home” exemption may be used on sale of a property by trustees of a trust if the property was the main home of a beneficiary of the trust and the settlor does not own another main home.

Here’s an example of sale by trustees of a trust where the main home exemption cannot be used:
Basil owns a family home where he lives.  He then decides to buy a flat for his son who is at university in Dunedin and settles the flat on a trust.  Basil’s son is a beneficiary of the trust but Basil (as settlor) cannot use the “main home” exemption because he has another main home.

New tax information requirements

From 1 October 2015 buyers and sellers will be required to complete a Land Transfer Tax Statement for every transfer of residential land through Land Information New Zealand.

What information is required in the tax statement?
The tax statement must be completed for each person involved in the transfer of residential land and must contain that person’s IRD number.  For a trust the IRD number of the trust must be used. There are also new requirements for tax residents in other jurisdictions/countries “Offshore Persons”.

What is an “Offshore Person”?
For an individual this is a New Zealand citizen who is outside NZ and has not been in NZ within the last three years; a person who holds a resident residence class visa and who is outside NZ and has not been in NZ within the last 12 months; a person who is not a New Zealand citizen and who does not hold a resident residence class visa. There are definitions for other entities not being individuals.

What are the requirements for Offshore Persons?
“Offshore Persons” buying or disposing of land must have a bank account in New Zealand together with an IRD number and also provide tax identification numbers for any country that they are tax residents in.

For more information about the selling process consult our office.