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Income Tax Act 2007

Income - Income from business or trade-like activities

CB 10: Disposal within 10 years: land development or subdivision business

You could also call this:

“Income rules for selling land within 10 years if you or someone close to you is in land development”

When you sell land within 10 years of buying it, the money you get from the sale might be counted as income. This happens if you were in the business of developing land or dividing it into lots when you bought the land. It doesn’t matter if you bought the land for that business or not.

The same rule applies if someone close to you, like a family member or business partner, was in the land development business when you bought the land. Even if you weren’t in that business yourself, the money from selling the land could still be counted as your income.

There are some exceptions to these rules. If you’re connected to a local council or if you’re part of the same group of companies as Kāinga Ora-Homes and Communities, you might not have to follow these rules. There are also exceptions for residential land and business properties. You can find more information about these exceptions in sections CB 15C and CB 15D, and sections CB 16 and CB 19.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512425.

Topics:
Money and consumer rights > Taxes
Housing and property > Land use
Business > Industry rules
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“Income from selling land within 10 years if you or a close associate deal in land”

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CB 11: Disposal within 10 years of improvement: building business, or

“Tax on land sold within 10 years of improvements by a house-building business”

Part C Income
Income from business or trade-like activities

CB 10Disposal within 10 years: land development or subdivision business

  1. An amount that a person derives from disposing of land is income of the person if—

  2. they dispose of the land within 10 years of acquiring it; and
    1. at the time they acquired the land, they carried on a business of developing land or dividing land into lots, whether or not the land was acquired for the purpose of the business.

      1. An amount that a person (person A) derives from disposing of land within 10 years of acquiring it is income of person A if a person (person B) associated with them at the time the land was acquired carried on a business of developing land or dividing land into lots, whether or not—

      2. person A carried on a business of developing land or dividing land into lots:
        1. the land was acquired for the purpose of person B’s business.

          1. Subsection (2) is overridden by the exclusions in sections CB 15C and CB 15D, for bodies linked or associated with a local authority and for companies in the same wholly-owned group as Kāinga Ora–Homes and Communities, and subsections (1) and (2) are overridden by the exclusions in sections CB 16 and CB 19, for residential land and for business premises.

          Compare
          Notes
          • Section CB 10(3): replaced (with effect on 1 July 2017), on , by section 117 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
          • Section CB 10(3): amended (with effect on 1 October 2019), on , by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
          • Section CB 10 list of defined terms Kāinga Ora–Homes and Communities: inserted (with effect on 1 October 2019), on , by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).