Selling a property in New Zealand while you are living overseas can be a complex process, but it doesn’t have to be. With the right preparation and support, you can sell your property smoothly and efficiently.
Step 1: Get legal advice
It is important to get legal advice from a qualified New Zealand property lawyer as early as possible in the selling process. They can help you understand your legal rights and obligations, and guide you through the process step-by-step.
Step 2: Prepare your property for sale
Once you have decided to sell your property, it is important to prepare it for market. This may involve making minor repairs and renovations, decluttering and cleaning, and staging the property to make it look its best.
Step 3: Find a real estate agent
A good real estate agent can be invaluable in helping you sell your property for the best possible price. They will have a good understanding of the local market and will be able to advise you on the best marketing strategy for your property.
Step 4: Market your property
Once you have found a real estate agent, they will start marketing your property to potential buyers. This may involve listing it on real estate websites, placing ads in newspapers and magazines, and holding open homes.
Step 5: Negotiate a sale price
Once you have received an offer from a buyer, you will need to negotiate a sale price. This can be a complex process, so it is important to have your lawyer on hand to advise you.
Step 6: Sign a sale and purchase agreement
Once you have agreed on a sale price, you will need to sign a sale and purchase agreement with the buyer. This is a legally binding contract, so it is important to read it carefully before you sign it.
Step 7: Settle the sale
Once the sale and purchase agreement has been signed, you will need to settle the sale. This involves transferring the ownership of the property to the buyer and receiving the payment from them.
Additional considerations for overseas sellers
As an overseas seller, there are a few additional things you will need to keep in mind:
- You must make sure you have a valid New Zealand IRD number before your complete the settlement.
- You may need to pay New Zealand income tax (Residential Land Withholding Tax) on any profit you make from the sale of your property if you are under Bright-line test period.
- You will need to arrange for the transfer of the sale proceeds to your overseas bank account.
Bright-line test rule for overseas persons
The bright-line test rule applies to all residential property sold in New Zealand, regardless of whether the seller is a New Zealand resident or an overseas person. Under the bright-line test rule, you will need to pay income tax on any profit you make from the sale of your residential property if you sell it within the Bright-line test period of acquiring it.
There are a few exceptions to the bright-line test rule, but these are generally not available to overseas persons. For example, you will not need to pay income tax on any profit you make from the sale of your residential property if you have used it as your main home for more than 50% of the time you have owned it. However, if you have lived overseas for more than 12 months during the time you have owned the property, this period will not count towards the 50% threshold.
Residential land withholding tax requirements
If you are an offshore RLWT person selling residential property in New Zealand, you may be subject to residential land withholding tax (RLWT). You’ll use 3 calculations to work out how much RLWT to deduct. The lesser amount from the following calculations is the amount of RLWT you deduct.
- Calculation 1 : Sale price x 10%
- Calculation 2 : the greater of (sale price less purchase price the seller originally paid for the property) x RLWT rate (see calculation notes below) or Zero (RLWT is a withholding tax of 33% upto 31 March 2021 and 39% from 1 April 2021 (or 28% if the seller is a company) that is deducted from the sale proceeds by the buyer’s conveyancer at the time of settlement).
- Calculation 3 : If you are the seller’s conveyancer, you should employ the following formula: Calculate the greater value between the sale price, reduced by any necessary amounts to settle any mortgage or other security with a New Zealand registered bank or licensed non-bank deposit taker against the property, and less any outstanding local authority rates, or simply zero. Conversely, if you are the purchaser’s conveyancer or the purchaser acting as the withholder, utilise the greater value between the sale price, reduced by any outstanding local authority rates, or zero.
You may be able to apply for a certificate of exemption from RLWT if you meet certain criteria, such as if you are selling your main home or if you are reinvesting the sale proceeds in a new residential property in New Zealand.
How Convey Law can help
Convey Law’s team of experienced property lawyers can help you understand your bright-line test rule and RLWT obligations when selling your residential property
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