Inland Revenue is cracking down on residential property investors who have sold without paying tax on the profits.
Most interestingly, the department is proactively matching tax returns with property transactions and asking tax advisers to do the same.
The bright-line test requires tax to be paid on the gains made if a property is sold within two years if bought between October 2015 and March 2018, or within five years if bought after the end of March 2018.
Whilst the family home and inherited property are not subject to the tax, a holiday house might be, as well as sales to family members or to a family trust.
IRD are clearly serious in what has been described as a “direct, planned, and coordinated” campaign with all tax advisers being warned.
IRD has estimated up to 25 per cent of investors might not have paid the relevant tax and penalties will be imposed if taxpayers fail to disclose these sales and are found out.
Acting quickly is key here – we advise anyone receiving a letter from IRD or thinking they might be affected, to contact us for assistance to make full disclosure to the IRD and arrange a payment plan for the monies owed.
Contact us today for all specialist tax advice and assistance.