For detailed answers that apply to property, download my free book (link in comments).
𝟭. 𝗜𝘀 𝗺𝘆 𝗳𝗶𝗿𝘀𝘁 𝘆𝗲𝗮𝗿 𝘁𝗮𝘅-𝗳𝗿𝗲𝗲?
No, it’s not. If you make a profit at the end of your first year in business, you will have tax to pay. You’ll need to pay by 7 February of the following year, or 7 April with a tax agent. From your second year, you may have to pay income tax in instalments. This is called provisional tax.
𝟮. 𝗗𝗼 𝗜 𝗵𝗮𝘃𝗲 𝘁𝗼 𝗽𝗮𝘆 𝘁𝗮𝘅 𝗶𝗳 𝗜 𝘀𝗽𝗲𝗻𝘁 𝗺𝗼𝗿𝗲 𝘁𝗵𝗮𝗻 𝗜 𝗲𝗮𝗿𝗻𝗲𝗱?
Yes. Being cash-flow negative doesn’t mean you don’t owe taxes. IRD looks at net profit, not just cash flow. So, even if you’re losing cash, you may still have taxable income. Shocking, isn’t it?
𝟯. 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗚𝗦𝗧?
Answer: GST is a 15% tax on the supply (sale) of most goods and services in New Zealand, most goods imported into New Zealand and some specified imported services. Lots of special rules, and exceptions apply to property.
𝟰. 𝗪𝗵𝗮𝘁 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆 𝘁𝗮𝘅𝗲𝘀 𝗱𝗼 𝗜 𝗽𝗮𝘆?
It depends on the type of property—residential or commercial (see below). Special tax rules also apply to mixed-use properties.
𝟱. 𝗛𝗼𝘄 𝗱𝗼 𝗜 𝗸𝗻𝗼𝘄 𝗶𝗳 𝗺𝘆 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆 𝗶𝘀 𝗿𝗲𝘀𝗶𝗱𝗲𝗻𝘁𝗶𝗮𝗹, 𝗰𝗼𝗺𝗺𝗲𝗿𝗰𝗶𝗮𝗹, 𝗼𝗿 𝗺𝗶𝘅𝗲𝗱-𝘂𝘀𝗲?
Here’s a GENERAL guide. Your property is residential if its main purpose is to give people a home, like a house, apartment or flat. Your property is commercial if it’s mainly used for business or industrial purposes, like a factory, shop or office. Exceptions and complexities apply. Sorry, I literally do not have space to explain more because LinkedIn only has a 3,000 character limit!
𝟲. 𝗛𝗼𝘄 𝗱𝗼 𝗜 𝗲𝗻𝘀𝘂𝗿𝗲 𝗜 𝗽𝗮𝘆 𝘁𝗵𝗲 𝗿𝗶𝗴𝗵𝘁 𝗮𝗺𝗼𝘂𝗻𝘁 𝗼𝗳 𝘁𝗮𝘅?
First, identify the legal owner of the property (individual, jointly owned, trust, company, partnership etc). This is a very common missed step. The owner must declare the income and pay taxes accordingly.
𝟳. 𝗗𝗼𝗲𝘀 𝗺𝘆 𝘁𝗮𝘅 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 𝗮𝗳𝗳𝗲𝗰𝘁 𝘁𝗵𝗲 𝘁𝗮𝘅𝗲𝘀 𝗜 𝗽𝗮𝘆?
Answer: Yes! Your tax liability depends on the structure (e.g., personal, trust, company etc) AND the type of property. Get this right to avoid paying more than necessary.
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