Purchasing property in New Zealand — whether it be as an owner-occupier or an investor — is one of the most popular methods of generating financial growth within the country. It’s so favourable because of New Zealand’s taxation laws which include no capital gains tax, no land tax and no stamp duty. Statistics from the Real Estate Institute of New Zealand show property returns an average capital growth of six percent per annum.
At RE/MAX, we help clients find and fund New Zealand property purchases from Australia when they wish to do so. RE/MAX has years of Trans-Tasman experience and can guide you through each step of the process.
Restrictions on buying a house in New Zealand
In 2018, there were a number of instrumental changes which transformed the way international residents could buy a house in New Zealand. Australia also has similar regulations to slow down international investment in residential properties. These regulations for international buyers on both sides of the Tasman have been put in place to stop overseas investors driving locals out of the market.
Purchasers interested in buying a house in New Zealand from Australia will be happy to know Australians are exempt from the Overseas Investment Amendment Act in New Zealand and don’t have to pay the national surcharge required for foreign investors to buy a house in New Zealand.
Permanent residents of Australia are essentially treated as locals when it comes to purchasing a house in New Zealand, regardless of whether this purchase is intended to be a place of residence or as an investment.
As a result of the trade agreements between Australia and New Zealand, Aussies can acquire New Zealand dollar-denominated mortgages, although Australian buyers do pay their tax in Australia, not in New Zealand. Australians earning rental income from houses in New Zealand only pay tax on this income in Australia, not in New Zealand. Although there’s no capital gains tax in New Zealand, Australian residents must still pay capital gains tax on any gains acquired from their New Zealand properties.
What is the Overseas Investment Amendment Act 2018?
The Overseas Investment Amendment Act 2018 restricts overseas buyers from purchasing residential property in New Zealand. During the 2017-2018 financial year — prior to this act being implemented — immigration to New Zealand grew by 19% and housing supply was limited.
This Amendment Act has reduced the number of residential properties sold to overseas buyers by approximately 83% and, in turn, has been successful in arresting housing inflation and growing vacancy rates in New Zealand as the market slowly began to self-regulate and followed a similar trajectory to the Australian market after house prices peaked nation-wide in New Zealand in 2017.
How do the New Zealand regulations differ to the Australian regulations on foreign investment?
While in Australia, temporary residents including students and those on a working visa can purchase property, they can’t in New Zealand. In order for anyone who is not a permanent New Zealand or Australian resident to purchase a house in New Zealand, a national surcharge is applied to the purchase.
As discussed, permanent residents of Australia are exempt from the Overseas Investment Act when buying a home in New Zealand. Conversely, New Zealand citizens buying a house in Australia can buy a home without permission from the Foreign Investment Review Board, but buyers from New Zealand are slapped with a double layer of stamp duty for investment properties in Australia, which is dubbed the Additional Foreign Acquirer Duty.
Top 3 Tips for Buying a House in New Zealand from Australia
1. Source an independent builder to examine the house before you purchase to make sure it’s a good investment. It can be difficult to purchase a property without seeing it for yourself, so it’s important to involve people you trust at every stage of the process.
2. Consider an online money transfer company like Transferwise or OrbitRemit to transfer your deposit from AUD to NZD. These companies tend to charge a fraction of the price of the big banks and all transfers are quick and secure.
3. Find a good real estate agent with plenty of Trans-Tasman experience who can help you navigate both markets. RE/MAX agents across Australia and New Zealand work seamlessly together to facilitate property purchases in New Zealand from Australia. Through an agency like RE/MAX with offices across both Australia and New Zealand, you can rely on the local expertise of RE/MAX real estate agents to find the right property for you.
With the advantage of global reach and local expertise, our experienced agents combine local know-how and market data to help you buy a house in New Zealand from Australia. Contact your local agent for a free property estimate today!