GST on Property Transactions

GST and Property in New Zealand

Property transactions are one of the most complex areas of New Zealand's GST system. The rules depend on who is selling, who is buying, what type of property it is, and what the buyer intends to do with it. Getting it wrong can mean an unexpected $75,000+ GST bill on a $500,000 property, or a zero-rating that should have been applied but wasn't.

Compulsory Zero-Rating (Section 11(1)(mb))

When a GST-registered seller sells land to a GST-registered buyer who intends to use it for making taxable supplies, the sale must be zero-rated. The key word is "must": this is compulsory, not optional. Both parties need to confirm their GST registration status before settlement, and the buyer must provide a written statement confirming they are registered and intend to use the property for a taxable activity. If the buyer later uses the property for an exempt activity (like residential rental), they may need to make a change-of-use adjustment.

Going Concern

Under section 11(1)(c), the sale of a going concern (a business sold as a whole, including the property) is zero-rated if both parties are GST-registered and the business will continue to operate. This is common in commercial property sales where the tenants remain in place. The conditions are: the supplier and recipient must agree in writing that the supply is a going concern, and the supply must be a taxable activity that is, or is to be, carried on by the recipient.

When GST at 15% Applies

GST at the full 15% rate applies when a GST-registered seller sells to a buyer who is not GST-registered. This is most common in new residential property sales by developers to owner-occupier buyers. The sale price is GST-inclusive, meaning the developer factors the GST into the price. For a new house sold at $800,000 inclusive, the developer accounts for $104,347.83 in output GST.

For the full suite of GST tools, visit the GST.co.nz homepage. For property tax calculators including the Bright-Line Test, visit Calculate.co.nz.

Last updated: April 2026 | Rates current for the 2026/27 tax year