Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


NZ levies one of the world’s lowest property purchase taxes

25th July 2016

New Zealand levies one of the world’s lowest property purchase taxes on prime real estate - global UHY study reveals

Encourages labour market mobility of senior executives and High-Net-Worth investment from overseas
Western European economies’ property taxes among the highest

New Zealand levies one of the lowest property purchase taxes in the world on prime real estate, charging no tax (0%) on a property purchase of USD$1 million, reveals a new study by UHY, a leading international accounting and consultancy network.

This is far lower than the global average of 3.3% (USD$33,038) for properties worth USD$1 million.

UHY says that by keeping taxes in this price bracket low, governments can encourage labour market mobility of senior executives and valuable overseas investment from High Net Worth individuals, although they also risk losing out on an attractive source of revenue.

UHY says that major European economies including France, Germany and Spain levy among the highest property purchase taxes in the world (see table below).

UHY’s findings show that Belgium has the highest average property taxes for real estate worth USD$1 million of any country in the study at 11.3%* - a charge of USD$113,131. Other western European economies at the top of the table include France and Germany, charging USD$50,901 and USD$50,000 respectively.

New Zealand and Russia have the lowest taxes in the table, effectively charging 0% on prime property purchases.

New Zealand has no central or local government transaction taxes on real estate and residential property deals between home owners, as they are exempt from the government’s Goods and Services Tax when the transaction is between two persons who are both unregistered for GST.

Similarly Russia imposes no transfer taxes on the buyer, who only pays a minor fixed amount of State Duty of around USD$30.

UHY says that while the G7 economies charge on average 3% (USD$29,720) - broadly in line with the global average - tax charges in the BRIC economies are around a third lower at 2.3% (USD$22,720).

UHY tax professionals studied tax data for individuals purchasing a house worth USD$1 million in 26 countries across its international network, including all members of the G7, as well as key emerging economies.

Comments Tim Livingstone, Director of UHY Haines Norton (Auckland) Ltd, a member of UHY: “Many economies risk over-exploiting property purchase taxes as a way to bolster finances, so it’s encouraging to see New Zealand exercising restraint.”

“Higher property purchase taxes can put a strain on domestic buyers, who may not actually be particularly wealthy, given house price inflation in some locations over the last decade or two.”

“Similar to New Zealand, the United States has one of the lowest tax rates in our study. The low level of tax enables home owners to move more freely from city to city. Now, the US is seen as having enviable labour market mobility.”

“Levying significant taxes on the cost of a new property can also constrain labour market mobility. If businesses have to offer much greater incentives for senior executives to relocate, this could have a serious impact on job creation and business investment, and ultimately on the wider economy.”

Tim Livingstone adds “Prime properties, especially in capital cities, are particularly desirable for wealthy investors from overseas, but where there are excessively high taxes, these markets could become less attractive. Capitals such as Paris or Berlin could lose out to locations such as Auckland and Wellington.”

“These wealthy overseas investors contribute to the local economy in many other ways, through discretionary spending while they are staying in the property, as well as maintenance costs, for instance by refurbishing extensively or employing staff.”

Residential property transfer taxes for the purchaser of a property worth USD$1,000,000

RankCountryRate**USD Amount
-Europe Average3.8%$38,355.94
-World Average3.3%$33,037.99
-G7 Average3.0%$29,719.71
-BRIC Average2.3%$22,719.71
22Rep of Ireland1.0%$10,000.00
26New Zealand0.0%$0.00

* This figure represents an average of the rates in Brussels, Flanders, and Wallonia which can vary from 9.8% to as high as 12.5%.
** Rates rounded to nearest tenth
*** Rate paid on cadastral value of property, not market price; for Italy (based on 2015 data), it includes the law with the provision that the rate applies on the cadastral value of the property, which is largely lower than the market price
**** Average of local variations


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Whakaari / White Island Eruption: Body recovery operation

The NZ Defence Force recovered the bodies of six people who tragically died in Monday’s eruption on Whakaari/White Island and will support efforts to recover the bodies of two others in the hope there is resolution for those families. .. More>>


Gordon Campbell: On Welfare Vs Infrastructure Spending

If New Zealand has a pressing need to stimulate its flagging economy, it seems very weird that the government is choosing a $12 billion package of infrastructure spending – mainly on road and rail – that by definition, will take a very long time to deliver their stimulatory benefits ... More>>

New Reports: "Immediate Commitment To Doing Justice Differently"

Justice Minister Andrew Little released two reports today, Turuki! Turuki! from Te Uepū Hāpai I te Ora, and Te Tangi o te Manawanui: Recommendations for Reform from the Chief Victims Advisor. Both recommend a fresh approach to the way criminal justice has been approached... More>>


"Heart-Breaking And Confronting": Surgical Mesh Restorative Justice Report

Minister Genter: “People have talked about losing the life they had enjoyed before surgical mesh harmed them – the loss of a steady job, the ability to exercise, a loving relationship in some cases. Others described the chronic pain they experienced..." More>>


Law Foundation: Government Decryption Powers Must Respect Privacy

The power of government to order users and companies to decrypt encrypted data and devices needs stronger privacy protections and additional safeguards, according to a study published by researchers at the University of Waikato. More>>

Latest 'Discussion Doc': National On Healthcare

National has today released our eighth Discussion Document which focusses on health and outlines a range of policies which will enable more Kiwis to access high-quality healthcare, Leader of the Opposition Simon Bridges says. More>>


Select Committee Report: Combatting Foreign Election Interference

MPs have finally delivered their recommendations to combat foreign interference in elections in a long awaited and much delayed report. More>>

Mosque Attacks: Names Of Arresting Officers Released

Police are now in the position to name the two officers involved in the arrest of the alleged gunman responsible for the attacks on the Al Noor and Linwood Mosques on March 15. More>>

Big, Bold, Permanent Change Needed: Children's Commissioner On 2019 Child Poverty Monitor

“I want to see family incomes dramatically raised by increasing benefits and making the minimum wage a living wage. And the Government needs to move much faster at increasing the supply of social housing..." More>>






InfoPages News Channels