Property Taxes in New Zealand
Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 14.06% | 25.02% | 30.27% |
Nonresident individuals are liable to pay tax on their income from sources in New Zealand. Married couples are separately assessed and taxed on their income.
The tax period in New Zealand is from 01 April of the current year up to 31 March of the succeeding year.
Income Tax
Taxable income is computed by deducting income-generating expenses, tax credits, and tax rebates from the gross income. Income is then taxed at progressive rates.
| Taxable Income, NZD | Tax Rate |
| Up to 15,600 | 10.50% |
| 15,600 - 53,500 | 17.50% |
| 53,500 - 78,100 | 30.00% |
| 78,100 - 180,000 | 33.00% |
| Over 180,000 | 39.00% |
| Source: Global Property Guide, PWC | |
Rental Income
Various expenses can be deducted from gross rental income, such as: rates (municipal land tax) and insurance; interest payments on mortgage to finance the rental property; agent’s fees for maintenance, collection of rent, and search of tenants; repairs and maintenance that is not considered as capital improvements on the rental property; motor vehicle expenses; legal fees incurred in arranging mortgage and drawing up a tenancy agreements (legal fees related to the buying and selling of the property are not deductible); accountant’s fee for the preparation of accounts; depreciation allowance to cover the cost of wear and tear and general aging of the building and its contents.
Assets include buildings, capital improvements, and chattels (furnishings, etc), which can be depreciated through either diminishing or straight scale. Buildings can either be depreciated by 4% (diminishing line) or 3% (straight line). Assets can be depreciated individually or in a group (pooled). Pooled assets can only be depreciated using the diminishing method, using the lowest depreciation rate in the group.
Capital Gains Tax
Gains resulting from the sale of real property are not normally taxed in New Zealand. They are taxed at normal income tax rates only under the following circumstances: dealing with property is the business of the seller, the property was acquired solely to make a profit on selling it or gains were made from an undertaking scheme whose goal was to make a profit.
Property Holding Tax
In New Zealand, property rates aren’t a fixed national percentage—they’re set by each local council, and the calculation is usually based on the capital value (market value) of the property, plus fixed charges. They range from ~0.2% to 0.35% annually.
Corporate Taxation
Income Tax
Income and capital gains earned by companies are subject to corporate income tax at a flat rate of 28%. Income-generating expenses are deductible when calculating taxable income.
Property Buying and Selling Taxes/Costs
| Transaction Costs | Rate | Who Pays |
| Property Transfer Tax | 0.00% | |
| Notary Fees | 0.10% - 0.40% | buyer |
| Legal Fees | 1.50% | buyer |
| Real Estate Agent Fee | 3.50% - 4.00% | seller |
| Costs Paid by Buyer | 1.60% - 1.90% | |
| Costs Paid by Seller | 3.50% - 4.00% | |
| Total Roundtrip Cost | 5.10% - 5.90% | |
| Source: Global Property Guide, PWC, Deloitte | ||
