The Government plans to tax offshore people on the profit they make from selling a New Zealand house if it is sold within 2 years after it was bought.  A Parliamentary Bill is now being considered by Select Committee.  It is probably aimed at discouraging the kind of speculative property trading by overseas property buyers which has been blamed for helping to push Kiwi house prices through the roof.

This new law has not been passed yet, but it has been expected for a while.  In October 2015 new Land Information rules required everybody buying or selling a property to register with the NZ Inland Revenue Department (IRD) and provide tax details, unless it is the sale or purchase of their "main home".  In particular, people with tax resident status in other countries are now required to provide their tax number for each country.  Now that this information is being collected as a matter of course, it will be possible to chase down those who later sell their houses and who will be liable for the new tax when it comes in.

It is possible that the new law will be passed before the end of the year.  The Government has been under pressure lately both to "do something" about the housing bubble, and to keep track of just how many foreign buyers are snapping up New Zealand houses.

The tax to be paid on the sale will be the smaller amount of:

For instance, if someone from overseas bought a house in 2015 for $500,000 and sells it now for $600,000, their profit is $100,000.  If they are an individual, they must pay $33,333 in Residential Land Withholding Tax (RLWT).  In another example, if they bought a house in 2015 for $2 million and sell it now for $3 million, then they pay $300,000 (10% of the price) and not $333,333 (33% of the profit on sale).

There is an exception that if there is not enough money left over to pay the tax after a mortgage has been repaid, then the tax is reduced to the amount which is left.