IR4 Question 21 Income from taxable property sales/disposals

Include all income and tax losses from land sales that are not included at Question 19.

• Tax losses from disposals of residential property are also included under this question.
• Net income from a bright-line sale is included under Residential income at Question 19. Except when the main home or holiday home taxed under the mixed-use asset rules apply.

The profits are taxable if the company bought a property for the purpose of reselling it or if the company is in the business of buying and selling land and/or buildings.

The profits may be taxable if the company:

• is a building company and improved a property before selling it
• developed or subdivided land and sold sections
• had a change of zoning on company property and sold it within 10 years of buying it.

If the company is a New Zealand tax resident it will need to pay tax on its worldwide income under New Zealand tax law. This includes any property sales worldwide whether caught under the bright-line test for residential property sales or the other property rules.

If the company purchased a residential property on or after 1 October 2015 and sold/disposed of it within the bright-line period, any profit will be taxable, whether the intention at the time of purchase was for resale or not.

The bright-line period for:

• properties purchased/acquired on or after 1 October 2015 through to 28 March 2018 inclusive, is two years,
• properties purchased/acquired on or after 29 March 2018 is five years.

Correctly calculate your profit or loss by completing a Property sale information – IR833 form for each property you have sold or disposed of. Include the results of any profit in your return. You can download the IR833 from ird.govt.nz.

Complete the form even if the details have been included in a Financial statements summary – IR10 or set of accounts.

For more information on property sales see our guide Buying and selling residential property – IR313. Write the income or loss (other than a bright-line income or loss) at Box 21B.

IR4 Question 21A Residential land withholding tax (RLWT) credit

If the company is an “offshore RLWT person” and has sold or transferred residential property located in New Zealand, RLWT may have been deducted from the sale price.

The company should have received a statement on the completion of the sale process showing the amount of RLWT deducted. The company can claim a credit for any RLWT deducted. Show the amount of RLWT deducted, less any RLWT paid back to the company and/or transferred to outstanding amounts during the income year.

If there was more than one amount of RLWT deducted, show the combined amount, less any RLWT paid back to the company and/or transferred to outstanding amounts during the income year.