New Zealand does not have a capital gains tax.
However, some capital gains are taxable. These include the gains made on some property sales, and sometimes on the sale of shares and other assets.
Rather than listing which gains are taxable, it’s simpler to tell you which capital gains are currently tax free:
Profits when you sell your home
Let’s assume that you live in your home full-time and you’re not a property trader. When you sell your home at a profit, that gain is not taxable. Gains on the sale of an inherited property are also tax-free, and the same applies if you are selling a house as the executor of an estate.
Profits when you sell other properties you’ve owned for more than 10 years
Once you’ve owned an investment property for more than 10 years, you won’t pay tax on any profits you make when you sell it. This includes a rental or a family holiday home. If you bought the property before 27 March 2021, the bright-line time limit may be shorter: zero, two or five years, depending on when you purchased it. You can read more about the bright-line test here.
Profits on the sale of shares you’ve purchased for an income
If you bought your shares to make an income from them, rather than with the intention to sell at a profit, any gains you make when you sell shares are not taxable. However, tax will apply if you are deemed a trader by Inland Revenue - this can be tricky, so definitely get advice when you’re buying and selling shares regularly.
Profits from the sale of your business
When you sell a business, the profit you make is not taxable.
Unfortunately, under every one of these categories, there are plenty of fishhooks. For instance, intention may be important, so you need to be clear about your intentions when you buy or sell shares or a home.
Tax is a complex topic. Don’t be caught out by making avoidable mistakes – get advice when you buy or sell. It’s as simple as a phone call
or an email, and we can give you the expert tax advice you need.