With the cold wet months well underway, Freddy was drying his socks by the fire and listening to the six o’clock news when Pebbles arrived for dinner.
“Hello Dad,” said Pebbles. “You look a bit worried, what’s wrong?”
“Hi Pebbles,” said Freddy. “Oh it’s nothing; I am just trying to understand this budget the government has come out with.”
“What part of the budget don’t you understand?” asked Pebbles
“It’s this capital gains tax rubbish, you remember I inherited that house in Hawera from Great Aunt Myrtle who died last year?” said Freddy. “I have tided it up a bit now and was going to sell it but now it looks like I will be charged tax on it when I sell. Is that right?”
“Well Dad, according to the new budget any residential property that is bought and sold within two years will now be deemed to be subject to tax on the gain,” explained Pebbles.
“So what does that mean for the property I just inherited from Great Aunt Myrtle in Hawera?” asked Freddy.
“There are certain exceptions to the rule Dad,” answered Pebbles. “If the property is a family home, if the property has been inherited, or if the property has been transferred as part of a relationship property settlement, then the owner won’t be liable for tax on the gain, if they were to sell it.”
“Well that’s good for me!” exclaimed Freddy “I will be able to sell Great Aunt Myrtles house and won’t be charged tax on any gain I made.”
“It would seem you will be OK Dad, but you should still check with your accountant and lawyer when you sell the house,” said Pebbles. “The government is releasing an issues paper in July that will provide more details on the budget.”
“That’s good for my situation!” said Freddy. “I also heard them say something about an IRD number.”
“That would be right,” replied Pebbles. “All non-residents and New Zealanders buying and selling any property other than their family home, will need to provide a New Zealand IRD number as part of the usual land transfer process. Non-residents will also be required to provide their tax identification number from their home country, and will also need to have a New Zealand bank account before they can get an IRD number when purchasing a property.”
“Well that makes things much clearer,” said Freddy. “We will have to get planning a holiday when I sell Aunty Myrtle’s house Pebbles! I hear Thailand is nice this time of year.”