Overseas tax residents behind 2-3% of property transfers

  • Louise Upston
Land Information

Initial data generated from the Government’s property tax measures in Budget 2015 indicates overseas tax resident buyers are behind 2-3 per cent of New Zealand property transfers, Land Information Minister Louise Upston says.

Over the six months to 31 March, 97,800 property transfers of all types were registered with LINZ. Of these:

  • 1692 (1.7 per cent) were transfers where at least one of the buyers involved declared an overseas tax residency.
  • 1695 transfers involved non-resident sellers, so there was no net change in the tax residency of property owners.
  • 38,061 (38.9 per cent) were transfers where buyers provided only a New Zealand tax residency.
  • 27,333 (27.9 per cent) were transfers where buyers were exempt from the reporting requirements – primarily because they were buying their main home.
  • The remaining 30,714 (31.4 per cent) of transfers were exempt because a contract existed before 1 October, but was settled after that date.

The Government introduced several measures on 1 October last year to bolster tax rules for property transactions.

They included requiring all non-residents and New Zealanders buying and selling any property (not just residential) other than their main home to provide a New Zealand IRD number as part of the usual land transfer process with Land Information New Zealand.

In addition, all those with overseas tax residency must provide their tax identification number from their home country, along with current identification requirements such as a passport.

“As a result of information gathered from these steps, LINZ has today issued the first batch of data covering the six months to 31 March,” Ms Upston says.

“While we can’t read too much into just two quarters, it indicates that overseas tax residents are behind a relatively small proportion of property transfers.

“The data for the first three months, in particular, was skewed by the number of transfers exempt because a contract existed before 1 October, but was settled after that date.

“Data for the three months ending 31 March is more useful, as fewer than 10 per cent of transfers were exempt for that reason.”

  • Of the remaining transfers, buyers declared an overseas tax residency for just under 3 per cent of transfers in the March quarter.
  • For 50 per cent of transfers, buyers provided only a New Zealand tax residency.
  • The remaining 37 per cent were exempt from the reporting requirements because they involved buying a main home.

LINZ asked further questions of property buyers to determine whether properties had a home on it. Over the six months to March, buyers indicated that around 90 per cent of all transfers involved a property with a home on it.

After determining how many of these buyers were trust companies and businesses, LINZ concluded that around 3 per cent were non-resident buyers of residential property.

“It’s important to note this is not a register of foreign land buyers – and it was not designed as one,” Ms Upston says. “But over time, this information will allow us to monitor trends in the tax residency of property buyers.”

LINZ expects the next data - for the three months to 30 June - to be released in late July.

Weblink to LINZ reports: http://www.linz.govt.nz/property-tax-data