New Zealand capital gains: when a gain is taxed

New Zealand has no general capital gains tax, but several rules tax a gain as ordinary income: the bright-line test for residential land, the intention rule and the dealer, developer and builder rules for land, the rules for shares and cryptoassets bought mainly to sell, and the foreign investment fund (FIF) rules for foreign shares. This Guide is for individuals. Figures are for tax year 2026. In New Zealand that is the income year from 1 April 2026 to 31 March 2027, which Inland Revenue calls the 2027 income year. The FIF guide used is IR461, April 2026. The Budget 2026 FIF proposal is dated 28 May 2026.

Core rule: no general CGT

• No general CGT in New Zealand. A gain is taxed only when one of the rules below makes it income. Then the profit goes into the person's income tax return and is taxed at the ordinary rates in the table below. There is no separate capital gains rate.

Personal income tax rates (resident individuals)

What	Value	Note
Source	all figures below	https://www.ird.govt.nz/income-tax/income-tax-for-individuals/tax-codes-and-tax-rates-for-individuals/tax-rates-for-individuals
Rate up to NZD 15,600	10.5%	Table "From 1 April 2025"; no later table is published
Rate from NZD 15,601 to NZD 53,500	17.5%
Rate from NZD 53,501 to NZD 78,100	30%
Rate from NZD 78,101 to NZD 180,000	33%
Rate from NZD 180,001	39%	Top rate

Bright-Line Test (residential property)

The bright-line test taxes the profit on selling residential land inside a set period, unless an exclusion or rollover relief applies. It also applies to New Zealand tax residents who buy and sell residential property overseas. See https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test

Which period applies

Sale date	Acquired	Bright-line period
On or after 1 July 2024	Any date	2 years
Before 1 July 2024	On or after 27 March 2021	5 years for qualifying new builds, 10 years for all other property
Before 1 July 2024	Between 29 March 2018 and 26 March 2021	5 years

Pages: https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test and https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/property-sold-before-1-july-2024

• The 2-year test is the only one for sales from 1 July 2024. A property bought in 2022 and sold in 2026 is tested against 2 years, not 10. IRD: "you no longer have to separate out new builds from all other properties."
• Start and end dates. For a standard purchase, the period starts when title transfers to you (generally settlement). For a standard sale, it ends when you sign a binding sale and purchase agreement. Off-the-plan purchases and gifts have different rules.
• Two different dates for old sales. For sales before 1 July 2024, which period applies depends on when the property was "acquired", which is generally the date of the binding purchase agreement. The period itself still starts at title transfer.
• Main home exclusion. For sales from 1 July 2024 the exclusion applies only if both limits in the table below are met. At or under either limit, the whole profit is taxable. The exclusion does not apply if you have a regular pattern of buying and selling or building and selling your main home, or if you have already used it twice in the 2-year period immediately before the sale. A construction period can be ignored. Sales before 1 July 2024 use different criteria, depending on whether the home was acquired before, or on or after, 27 March 2021. Only actual use counts, not intention, and use by a family member alone does not count.
• Other exclusions. Business premises used predominantly as such, and farmland, are excluded. The test does not apply to an executor or administrator of an estate or to a person who inherited the property.
• Offshore sellers. If you are an offshore RLWT person, residential land withholding tax is deducted by the conveyancer at sale unless you hold a certificate of exemption.
• Reporting. Complete the IR833 bright-line property sale form and show the net profit in your income tax return (see nz-income-tax-ir3).

Main home exclusion limits (sales on or after 1 July 2024)

What	Value	Note
Source	all figures below	https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test/exclusions-to-the-brightline-test
Share of the property's area used as the main home	more than 50%	"used more than 50% of the property’s area as your main home"
Share of the bright-line period lived in as the main home	more than 50%	"lived in the property as your main home for more than 50% of the bright-line period"

Land taxed whatever the holding period.

• Intention rule. Profit is taxable if one of your purposes when buying was to resell, however long you keep it. It applies to commercial and residential property. It usually does not apply to your main home or a long-term rental bought as such. See https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/buying-intending-to-resell
• Dealers, developers and builders. Property bought as part of a property or construction business is taxable whenever sold. Property bought outside the business is generally taxable if, when you bought it, you or an associated person was in the business of dealing, developing or subdividing and you sell within 10 years of buying. For builders, the rule applies if you or an associated person was in the building business when improvements began, and the 10 years run from completing the improvements. The 10-year rule does not apply to your main home, to property used in your business (but not as a rental), to an employee of such a business, or if you were no longer in the property business when you bought the property or bought it before going into business. See https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/dealers-developers-builders

Share trading: investor vs trader

• When a share sale is income. An amount from selling shares is taxable when you bought the shares for the dominant or main purpose of selling them, have a share dealing business, or hold them as part of a profit-making scheme. You do not need to be in business: a one-off sale is taxed if the shares were bought mainly to sell. The taxable amount is the sale price less the cost. Keep records that show your purpose when buying. See https://www.ird.govt.nz/income-tax/income-tax-for-individuals/types-of-individual-income/share-investments
• Dividends are always income, including foreign dividends. Foreign shares above the FIF limit follow the FIF rules below instead.
• Cryptoassets. Profits from selling or exchanging cryptoassets, including swapping one cryptoasset for another, are taxable if you acquired them for the purpose of disposal, trade in them, or use them in a profit-making scheme. Moving assets between your own wallets is not a disposal. See https://www.ird.govt.nz/cryptoassets/individual/buying-selling and the Guide new-zealand-crypto-tax.

Foreign Investment Fund (FIF) regime

A FIF is a foreign company, foreign unit trust, foreign superannuation scheme or foreign life insurance policy. Under the FIF rules income is attributed each year, so you may have FIF income before receiving any money. See https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income/foreign-investment-funds-fifs

FIF figures

What	Value	Note
Source	all figures below	https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income/foreign-investment-funds-fifs/foreign-investment-fund-rules-exemptions
De minimis: an individual whose FIF interests cost less than this in total does not calculate FIF income	NZD 50,000	"attributing interests in FIFs that cost less than NZ$50,000 in total"

What	Value	Note
Source	all figures below	https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-guides/ir400---ir499/ir461/ir461.pdf
Fair dividend rate: income deemed each year, on opening market value	5%	"taxed on 5% of the opening market value of their attributing interests in foreign companies"

What	Value	Note
Source	all figures below	https://www.taxpolicy.ird.govt.nz/-/media/project/ir/tp/publications/2026/is-foreign-investment-fund.pdf
PROPOSAL ONLY, not current law: Budget 2026 information sheet of 28 May 2026, would apply from 1 April 2026 if enacted	NZD 100,000	"Increase the FIF de minimis threshold to $100,000 of overseas investments (from $50,000)"

• The de minimis is a cost test, on the total cost of all FIF interests, not market value, and it must be met throughout the year. If the total cost goes over NZD 50,000 on any day in the year, all your FIF interests are subject to the FIF rules: it is not an allowance, and the first NZD 50,000 is not exempt. Spouses or partners who hold interests jointly each apply the limit to their own share. See IR461: https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-guides/ir400---ir499/ir461/ir461.pdf Below it, the ordinary rules apply: dividends are taxed, and a sale is taxed only if the shares were bought mainly to sell. The exemption does not apply to anyone who has included FIF income or loss in their return for the year.
• ASX-listed Australian companies that are Australian resident (and not treated as resident in another country under a tax agreement), keep a franking account and do not offer stapled stock are exempt from the FIF rules, whatever the amount invested.
• Methods. Above the de minimis, FIF income is worked out under one of: fair dividend rate (the most common), comparative value, cost, deemed rate of return, revenue account method (RAM), or attributable FIF income. IR461: "From 1 April 2025, eligible individuals and family trusts may use the revenue account method (RAM)", which taxes dividends and gains on a realisation basis. Eligibility is limited. The Budget 2026 information sheet says RAM "was introduced on 30 March 2026 for recent migrants", and that opening it to all residents is only proposed. Do not suggest RAM without confirming the person is eligible.
• Budget 2026 changes are proposals. The information sheet in the table above says the de minimis increase and wider access to RAM "would apply from 1 April 2026" and "may change as the legislation moves through the parliamentary process". IRD's exemptions page still prints the old limit. Confirm whether the change was enacted before using the new figure. IRD's commentary on the Taxation (Budget Measures) Act 2026, enacted 5 June 2026, does not mention the FIF changes: https://www.taxpolicy.ird.govt.nz/publications/2026/ac-taxation-budget-measures-act
• Foreign superannuation is taxed under the FIF rules only if it is a "FIF superannuation interest".

Exit from New Zealand

• Leaving does not end the land rules. The bright-line test taxes the sale of New Zealand residential land inside the period whether or not the seller is still resident, and offshore RLWT persons have tax withheld at sale (Bright-Line section above).
• Residence decides FIF and foreign income. Whether you stop being a New Zealand tax resident is decided by the 325-day and permanent place of abode rules. See the Guide nz-tax-residency.
• Tax on leaving. This Guide has not confirmed from an official page whether New Zealand charges any tax when a person leaves. Do not tell a reader that no tax is due on leaving without a New Zealand adviser's confirmation.

The method, step by step

1. Identify the asset and the date it was acquired and is being sold. For land, find the title transfer date and the date of the binding sale agreement: https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test
2. Test the land against the intention rule and the dealer, developer and builder rules first; they apply whatever the holding period: https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/buying-intending-to-resell
3. If still untaxed, apply the bright-line period from the table above, then the exclusions (main home, business premises, farmland, inheritance): https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test/exclusions-to-the-brightline-test
4. For shares, decide the dominant purpose at purchase; for foreign shares, total the cost of FIF interests against the de minimis and check the ASX exemption: https://www.ird.govt.nz/income-tax/income-tax-for-individuals/types-of-individual-income/share-investments
5. Put any taxable profit (and IR833 for bright-line sales) in the income tax return, taxed at the rates in the first table: https://www.ird.govt.nz/income-tax/income-tax-for-individuals/tax-codes-and-tax-rates-for-individuals/tax-rates-for-individuals

Ask the client first

• On what date did title transfer to you, and on what date did you sign the binding sale and purchase agreement to sell? (Sets the bright-line period.)
• Did you live in the property as your main home, for how much of the time, and over how much of the area?
• When you bought it, was reselling one of your purposes? Are you, or anyone associated with you, a property dealer, developer or builder?
• Why did you buy the shares or cryptoassets, and what records show it?
• What did your foreign shares cost in total, and are any ASX-listed Australian companies?
• Are you a New Zealand tax resident, and have you been at all times you held the asset?

When to refuse or refer

• Refer property held in a trust, company or partnership, rollover relief transfers, off-the-plan purchases, subdivisions and gifts: the start and end dates and main home rules differ.
• Refer anyone associated with a property dealer, developer or builder.
• Refer FIF holdings above the de minimis, foreign superannuation, and any case that depends on whether the Budget 2026 FIF changes were enacted.
• Refer a person who changed residence while holding the asset, or who may be taxed in another country too (see nz-tax-residency).
• Refuse to state that a gain is tax free without the purchase purpose and dates.

Sources

• https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test
• https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/property-sold-before-1-july-2024
• https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test/exclusions-to-the-brightline-test
• https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/buying-intending-to-resell
• https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/dealers-developers-builders
• https://www.ird.govt.nz/income-tax/income-tax-for-individuals/types-of-individual-income/share-investments
• https://www.ird.govt.nz/cryptoassets/individual/buying-selling
• https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income/foreign-investment-funds-fifs
• https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income/foreign-investment-funds-fifs/foreign-investment-fund-rules-exemptions
• https://www.ird.govt.nz/-/media/project/ir/home/documents/forms-and-guides/ir400---ir499/ir461/ir461.pdf
• https://www.taxpolicy.ird.govt.nz/-/media/project/ir/tp/publications/2026/is-foreign-investment-fund.pdf
• https://www.taxpolicy.ird.govt.nz/publications/2026/ac-taxation-budget-measures-act
• https://www.ird.govt.nz/income-tax/income-tax-for-individuals/tax-codes-and-tax-rates-for-individuals/tax-rates-for-individuals

Working paper only. The FIF rules are complex and depend on the specific foreign investments held. The bright-line periods have changed several times, so confirm the period from the sale date and, for older sales, the acquisition date. Have a qualified New Zealand chartered accountant review this Guide before relying on it.

Contributed by OpenAccountants.