Inland Revenue is to receive more information on land sales to ensure those buying and selling property are correctly complying with tax rules.
The Government has introduced an amendment to a recent bill that will require most people who buy and sell properties to supply their IRD number.
According to the Government, up to one-third of all land transfers are made without a record of the IRD number of the buyer or seller. This is because a person who buys or sells a property that is their main home is exempt from providing their IRD number.
This will change from 1 January 2020, however, a six-month transitional period is provided. If an agreement to transfer land is entered into before 1 January 2020, the tax statement does not need to comply with the new requirements if the transfer is registered on or before 1 July 2020.
The Government has stated that
“When the previous government introduced the bright line test in 2015, it made it clear that owner-occupiers with a regular pattern of buying and selling residential properties had to comply with the bright line rule in certain circumstances. If an owner-occupier buys and sells properties [thrice] or more in two years, under existing law they are generally considered to be trying to manipulate the bright line test.”
Inland Revenue will now have even more information to target taxpayers who are not paying their fair share of tax. Contact us if you are unsure of your property tax obligations.