Buying Process
One thing you’ll notice in New Zealand is the many different types of property on offer due to more space and affordable land being available to the potential buyer. The process of buying a house is also refreshingly simple. Initial offer to completion takes on average 3-4 weeks
- Independent legal advice is highly recommended, particularly before signing the Sales Contract or paying a deposit
- You should check with your Australian Lawyer or Estate Agent that the costs charged by Legal and Government Authorities are fully clarified. The lawyer may also include within his charges costs for assigning the Australian mortgage
- Lenders are required by law to identify the borrower in person in a New Zealand branch prior to final approval of the loan. They will also require a New Zealand representative, normally a solicitor, to hold power of attorney so that they may act on behalf of the client if required
Taxation Issues
- Neither inheritance tax nor capital gains tax are features of the New Zealand tax system giving incentive for potential investors looking to purchase property.
- The only significant taxation for those interested in purchasing property in New Zealand is income tax. New Zealand residents must pay income tax in New Zealand on their worldwide income. If you are a New Zealand resident, most of the income you receive will be subject to tax. This income includes (amongst others)
- income from investments
- rental income
- Non New Zealand residents must pay tax in New Zealand on any income that has a source in New Zealand. The New Zealand income tax rates (as of September 2003) are
- income up to $38,000 – 19.5%
- income $38,001 to $60,000 – 33%
- income $60,01 and over – 39%
- The rate of depreciation claimable by an investor on his property is 4% and that rate is far higher than the rate of depreciation deductible in Australia for example and has led more investors to examine New Zealand more closely
Investment Potential
Recent success of New Zealand’s property sector (apart from a significant impact of the Lord of the Rings Trilogy) can be attributable to the ongoing strength of the market sector that is underpinned by the dynamic economic growth that New Zealand has enjoyed since transforming its economy into a free market economy that is globally competitive. This has resulted in substantial wage increases, impressive horizontal inward foreign direct investment and the creation of more job opportunities which in turn has made the local population far wealthier in real terms and forced the price of property up.
For property investors considering New Zealand for the first time, the attractions of the market sector are strong and sustainable demand for rental, resale and brand new property from a domestic market that is getting progressively wealthier, strong demand from overseas purchasers seeking a base or new home in New Zealand and numerous financial benefits that make buying, owning and selling property a potentially very profitable venture.
Interested?
