Chartered Accountants & Tax Specialist
General update by IBBZ Accounting on latest tax news, business growth and technology tips.
The Government will give extra $29million to the IRD in Budget 2015 for the property tax compliance activities. This is mainly to ensure property speculators also pay their fair share of tax, which is currently by enlarge being avoided.
The new rules will come in to effect from 01-10-2015:
This test will require income tax to be paid if a residential property is bought and sold within two years, unless it is the seller’s main home.
If a property is sold within two years, then the tax will be paid on any gains made from the sale. There are some exemptions such as seller’s personal home, inherited property and relationship property settlement.
The IRD will have much information around this prior to the implementation (01 Oct 2015). However, this may be little harder to implement in practical terms, as people may delay selling the property and wait for two years before they sell.
Intention test has always been a subjective matter, the bright line test gives little more tools to the IRD to implement property related tax. But in the absence of full fledge capital gain tax, will this help to curb property speculators, only time will provide answer to this question