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Your reasons could be purely personal as you are about to migrate and live in New Zealand, or it can be part of your asset management to have real estate in an overseas country that will provide capital growth or return on investment or both.
I want to live there full-time
Yes, you can purchase real estate in New Zealand. You’ll need to apply for permanent residence. Take the first step to permanent residence - click here to find out the steps to take.
I only want to live there some of the time
Many people spend just part of their year in New Zealand and have homes here and in their home country. You’re still allowed to purchase residential, commercial and industrial real estate as long as it’s in an urban area but it could be subject to certain conditions.(View information “buying land without restrictions, buying land with consent and land excluded from foreign ownership.”)
As the immigration rules often change it’s best to check the time limit for living in New Zealand without permanent residence.
click here for more information
I want a long-term investment
The good news is that there is no tax on capital gains unless you buy with the objective to sell some time in the future and make a profit. And, there’s no time limit. If you invest to hold the investment, capital gains tax should not be a problem.
What about a speculative investment?
Capital gains tax is payable on business profits from property speculation, because it’s regarded as a normal business income.
Capital Growth
Buying land in our country is ideal when you have capital growth in mind. Click here to view what Dolf de Roos said about the prospects in New Zealand.
Return on Investment
You can earn an income stream from purchasing residential real estate, a commercial or industrial building. If you want to buy a farm, you’ll have to show that you can substantially improve the present income from it and that you’ll employ significantly more people, to get the Overseas Investment Commission consent you need.
How can I keep my tax bill down?
You should get advice from a tax specialist, but there are quite a few expenses that are tax deductible e.g. interest, legal fees for arranging the mortgage, rates and insurance, normal repairs and maintenance, travel expenses, agent’s fees and commission for property management, accounting fees and depreciation.
What expenses aren’t deductible?
In New Zealand your mortgage repayments are not tax deductible but your interest on the mortgage is. Neither is the purchase price or the legal fees in buying the property tax deductible.
How do I claim depreciation?
The government is going to review the current depreciation rules, so you will need to keep informed on this one.
Presently there are two formulas that you can use: Diminishing Value Method and the Straight-Line Method. The two methods will still be available according to the discussion paper released by the Inland Revenue Department and New Zealand Treasury. The proposed rate for diminishing value is 3% and for straight-line 2% of the depreciable asset. click here for more information
Managing my property
Property management is a tax-deductible expense. But, it’s extremely important to do your homework before you hire a property manager. While there’s protection under the Real Estate Agents Act, if you hire an unlicensed property manager you face considerable risk if they go under, or don’t do their job. Because they’re not covered by the Act or the Real Estate fidelity fund, the Real Estate Institute of NZ has no obligation to recompense any losses you sustain. So investigate the property manager’s credentials thoroughly before you hire. We can point you in the right direction.
I want to retire in New Zealand
As an investor, New Zealand can provide a great retirement lifestyle. If you can’t invest and migrate under the investor category you will not be able to retire in New Zealand.
Allowing overseas people to retire in New Zealand has been discussed for many years. The pluses are that this would bring influential and wealthy immigrants to the country. They wouldn’t take any jobs but would spend a significant amount of money supporting the local economy. But on the downside, the risk that elderly people could be a burden on the health system has prompted the Government to dismiss this option.
But, if you have investments you can bring here, you can retire here under the investor category.
Business Catagory to obtain Residence
This category, which allows people to gain residence on the condition they invest in New Zealand, has been operating in various forms since 1978.
The Minister of Immigration said the rules had been tightened to make sure only genuine investors who will contribute long-term to the New Zealand economy and society gain residence. "The changes bring the Investor Category into line with the Skilled Migrant Category, where applicants submit an expression of interest and the Department of Labour selects the best candidates. "Rather than passively accepting applicants, investors will now be selected on the basis of what they can contribute to New Zealand."
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The main points of the new policy are: ·
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The minimum amount to be invested has increased from $1 million to $2 million ·
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Funds will be transferred to a New Zealand bank account in the applicant's name for verification ·
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Funds will then be transferred to the government to invest in infrastructure projects for five years ·
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At the end of this period, applicants will receive their money back plus interest based on the rate of inflation ·
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Half of the funds can be withdrawn after two years and transferred to another government-approved investment ·
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Applicants must be 54 years or younger, with at least five years’ business experience, and willing to make New Zealand their main home by the end of the investment period ·
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Health, character and English language requirements have not changed.
Under the old policy, applicants were granted residence if they could reach a pass mark by accumulating points for business experience, the amount of funds brought into New Zealand and their age. Applicants falling short on the business experience and age criteria could compensate by bringing in more funds. It was also difficult to verify that the investment was genuine. Applicants could put their money into any investment they chose and these often did not directly benefit New Zealand. "The new policy will make sure applicants will be quality migrants with proven business experience and who will contribute to our economy and settle successfully," Mr Swain said. Expressions of interest under the new Investor Category will be accepted from 4 July 2005. For more information click here
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