When should you declare the profit you have made from the sale of your property? It depends on your reason or intention at the time you bought the property. When deciding whether or not your obliged to declare the profit from the sale of the property, the IRD will look at your intention when you first bought the property. If you bought the property with the firm intention of selling it when prices rise, the profit is likely to be taxable. However, if you bought the property to provide a home for your family, any profit from the eventual resale will most likely not be taxable.
Even though you may be providing a home for your family, the IRD may consider you a property trader if you have a regular pattern of buying, living in and selling properties.
The IRD are hot on profits from properties and looking for all angles to enforce the law. The law has not been changed - just the vigilance of its enforcement.
I can't help thinking that if this vigilance was applied during the housing boom, maybe the housing market would be less depressed now. And no, I'm not an apologist for the tax man, just speculating on reasons the property boom was so profitable for so many people .
If you have any accounting, tax or business questions, please email one of our team specialists.
Regards, Jamie Tulloch
Managing Director of Wood Rivers Hawes
jamie@woodrivers.co.nz
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As Managing Director, I guarantee that as a client of Wood Rivers Hawes you will receive cost-effective accounting, tax, business and family trust services delivered in a timely manner. The company promises to involve you and communicate with you regularly, by phone, letter or email newsletter. I cannot guarantee you the outcome but I do guarantee you satisfaction with our services. If Wood Rivers Hawes does not perform to your satisfaction, please inform me promptly. I will do everything reasonably possible to resolve any issue that may arise.
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