Offshore investors in New Zealand property may soon be hit with a hefty new tax, if a bill currently before the country’s parliament becomes law.
The proposed legislation would force offshore property investors to pay capital gains tax at the marginal rate on properties sold within two years of the purchase date.
The new law would apply to any residential property purchased from 1 October 2015 onwards. It would affect non-New Zealand citizens and those New Zealand expats who have been out of the country for more than three years.
The bill passed its first reading on 8 December 2015, and is due to be taken up again when parliament reconvenes in February. If passed, it is expected to come into force on 1 July 2016, observers there say.
The issue of foreign ownership of property is hot political issue in New Zealand, and the country’s conservative prime minister John Key’s proposed policy is considerably more relaxed than that of his counterpart in the Labour Party.
Labour leader Andrew Little has gone so far as to suggest that there should be an outright ban on non-citizens and non-residents owning New Zealand property.
“Under Labour, if you have the right to live here you have the right to buy here, but not otherwise,” Mr Little was reported as saying in July last year.
The New Zealand government is in the process of collecting data on exactly what portion of the country’s residential property is in foreign hands. Currently no accurate figures exist.
New Zealand’s top marginal rate is 33%, which kicks in once your income exceeds NZ$70,000 (£32,000, US$46,000) a year.