Inheriting property in New Zealand while living overseas…

An ex-pat Kiwi was notified that they had been left an inheritance in New Zealand, which included a residential property. As there are restrictions on ‘overseas persons’ owning land in New Zealand, they sought advice on the potential legal and tax implications of receiving the inheritance.

Who is an ‘overseas person’?

An ‘overseas person’ includes a person who is:

• Not a New Zealand citizen; 
• Not ordinarily resident in New Zealand;
• A New Zealand citizen who has been living overseas for the last 3 or more years continuously, and at the time of acquiring the property will not be in New Zealand; or 

A New Zealand resident (holding a resident visa) who has been living overseas for the last 12 months or more continuously, and at the time of acquiring the property will not be in New Zealand. 

Overseas Investment Office (OIO) Consent 

Generally, an ‘overseas person’ requires OIO consent to own property in New Zealand. However, consent is not required for transfers of property to or from an administrator or executor of an estate. This means that an ‘overseas person’ is able to inherit residential property in New Zealand.

Brightline Roll-over Relief

The main form of tax on property in New Zealand is known as the Brightline tax, which is a form of capital gains tax. 

Certain transactions are eligible for roll-over relief, where the new owner of a property is treated as purchasing it at the same price and at the same time as the previous owner. The previous owner is treated as disposing of the property at cost which means there is no bright-line tax to pay at the time of the transfer. 

Residential property transferred to and from an executor or administrator benefits from roll-over relief. The subsequent sale of the inherited property by the beneficiary also benefits from rollover relief.

This means an overseas person would not be subject to New Zealand brightline tax when inheriting residential property in New Zealand. However, we always recommend receiving tax advice to check any tax implications in their country of residence in relation to the inheritance. 

IRD Number

Any beneficiary acquiring property in New Zealand through inheritance will need to have a New Zealand IRD number. This requirement often adds a step in the process since many overseas persons may not have an IRD number if they have not resided within New Zealand previously.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.