Stamp Duty New Zealand? There is none! But what about other property taxes and purchase costs?

New Zealand has some restrictions on foreigners purchasing real estate. Generally, only New Zealand citizens and residents are permitted to buy houses and homes to live in.

However, there are certain exceptions where foreigners can buy in New Zealand. Overseas buyers are allowed to purchase off-plan apartments for investment, but not to live in themselves (although there are some scenarios, albeit limited, where overseas buyers can purchase for owner occupation).

In this article, we look at the property taxes and costs associated with buying property in New Zealand. Stamp duty New Zealand doesn’t exist, but what about the other property taxes and costs when a residential property is acquired?

Because the cost of your property and the costs associated with buying your property are the principal determinants for the financial performance of your investment you have to ensure you’ve done your calculations, analysis and budgets correctly.  If you’re buying overseas, you need to understand all the associated costs, fees and property taxes as they will differ from those in your home country.

As an investor, you must ensure you don’t pay too much for your property, and you account for all the costs you incur.

CONVEYANCING FEES 

Conveyancing fees are relatively low in New Zealand and are typically between $900 – $1,500.

Your solicitor will also need a Land Information Memorandum (LIM) which will cost between $NZ307 and NZ$405 if you’re buying in Auckland.

STAMP DUTY NEW ZEALAND 

Unlike Australia and the UK, New Zealand does not impose Stamp Duty Land Tax (or an equivalent) on the purchase of property. In addition, it doesn’t impose a stamp duty surcharge on foreign buyers. The New Zealand government imposes restrictions on what properties foreign investors can buy, but the associated charges are carried by the developer and not the buyer. You can read more about the properties that foreign investors can buy in our article here.

There is a Goods and Services Tax (GST) payable at the point of purchase, this however, is typically quoted in the purchase price.

Stamp Duty New Zealand doesn't exist

TRANSFER CHARGES

New Zealand introduced the Land Transfer (Compulsory Registration of Titles) Act in 1924 which brought most of the land in New Zealand under The Torrens system and by 1951 the register was complete, although there are still some small parcels of land which fall outside of the register.

Unlike Australia where property title is administered at a state level, New Zealand is not divided into separate states. It simply has a national government and sixteen local regional councils therefore The Torrens system in New Zealand is administered at a national level.

In New Zealand there is a fee for the Lodgement and registration of an instrument (legal document), every time a change to property title occurs such as a change of ownership, These fees are set out below.

Fee for…ManualAuto-registration/Landonline
Lodgement and registration of an instrument$176$80
New titles (issue a record of title), each title$135$135

Mortgage Costs and Fees

If you’re purchasing a property with a mortgage, there will be costs associated with this. These costs will vary depending on your individual circumstances and the mortgage you’re applying for. Costs may include:

  • A loan processing fee (typically in the order of NZ$150)
  • Valuation fees (this will vary depending on the location and size of the property, but typically in the order of NZ$500-NZ$800).

Anything Else?

Depending on your personal circumstances you may encounter other costs, such as currency charges if you’re transferring money from overseas or mortgage broker fees and so on.

This article has focused on the costs and taxes at the point you acquire your residential property in New Zealand.

There will be associated maintenance and running costs and income tax to pay on your investment property in New Zealand. Income tax will also be payable on the net rental income (whether the property is leased on a short or long term basis).

There may also be taxes to pay when you sell your property. Generally, there is no tax on Capital Gains in New Zealand. However, it does apply in some specific circumstances. Taxes can apply under the Intention rule, the Bright-line rule and Residential Land Withholding Tax rules. For more information on taxes and charges that apply and expenses that can be deducted, download our comprehensive Buyer’s Guide to New Zealand.

Property investment is complex and multiple factors dictate whether a property is good or is an investment – it’s not simply about the purchase costs.  Before making a commitment to purchase any property, be sure to run financial models, so you have a really clear understanding of the likely performance of your property.

Read in conjunction with our other articles on investing in New Zealand together with our buyer and country guides, this should give you a comprehensive understanding of the market. If you’d like to talk to me in more detail or have any questions, I’d love to hear from you – please email me at [email protected]

We’ve produced articles not just for New Zealand, but also for Australia and the UK, so make sure you take the time to consider all your options and make sure your investment is right for you. 

    

Important notice:  Proptech Pioneer and its associated companies seeks to provide investors with guides, information and tools, but we cannot guarantee this information to be accurate or perfect.  You use the information at your own risk and accept no liability if you rely on this information.   Proptech Pioneer is not a tax advisor, accountant, conveyancer, lawyer, financial advisor or mortgage advisor.  You should seek independent advice from independent professionals before making any investment decision