Far North Tax Professionals

GST on residential properties

There’s generally no GST on residential properties in New Zealand .  But there are circumstances when a taxpayer buying and selling residential properties can be liable for GST.

To be liable for GST registration, and therefore liable for GST on business sales, there must be a “taxable activity” and sales value in excess of the minimum $60,000 annually.

If a taxpayer buys and sells properties in quick succession, Inland Revenue may consider that activity to be a “business”.  It there is a “business”, the taxpayer is liable to register for GST and the business owner then becomes liable for GST on the gross sales (less credits on qualifying purchases and expenses) – as well as income tax on the profits.

This is one of the few exceptions to the general rule about GST on residential properties.

According to a recent judicial decision, personal occupation of each property does not affect the issue if there is an intention to buy and sell to make a profit. If the primary purpose is the purchase, development and sale of property, any property occupied is not “primarily and principally” used as a family residence.

Michael Goodchild

Far North Tax Professionals


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