IR3NR Question 22 Income from taxable sale/disposals of property
Income from the sale of land and/or buildings
Include all income from land sales that are excluded from the residential property deduction rules.
Tax losses from disposals of residential property are also included under this question.
Net income from a bright-line sale is included under Residential income at Question 19, except the main home and holiday home taxed under the mixed-use asset rules.
The profits are taxable if you bought a property for the purpose of reselling it or are in the business of buying and selling land and/or buildings.
The profits may also be taxable if you:
- are a builder and improved a property before selling it
- developed or subdivided land and sold sections
- had a change of zoning on your property and sold it within ten years of buying it
The bright-line test needs to be considered when none of the other land sale rules apply to the disposal of the property.
If you purchased a residential property on or after 1 October 2015 and sold/disposed of it within a certain period, any profit will be taxable, even if you didn’t intend to sell when you purchased it.
This is called the bright-line test. The bright-line test applies to:
- properties purchased/acquired on or after 1 October 2015 through to 28 March 2018 inclusive and sold/disposed of within 2 years, and
- properties purchased/acquired on or after 29 March 2018 and sold within 5 years.
Income from sales/disposals of residential property is included in residential income in Box 19A.
Write the total profit from other property in Box 22.
Complete a Property sale information - IR833 form for each property sold/disposed of and include it with your return. The form explains how to calculate and correctly return the resulting profit or loss. You can download the form at ird.govt.nz/forms-guides.
Complete the form even if the details have been included in a Financial statements summary - IR10 or set of accounts.
If the property was taxable under the bright-line test and made a loss, any excess deductions cannot be claimed unless they can be offset against net income from other residential property sales.
For more information on property sales, refer to the guide Buying and selling residential property - IR313.