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New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from business or trade-like activities

CB 14: Disposal: amount from land affected by change and not already in income

You could also call this:

“Tax on profits from selling land affected by zoning or use changes”

You may need to pay income tax on money you get from selling land if:

  1. You sell the land within 10 years of buying it.
  2. You make more money from selling it than what you paid for it.
  3. At least 20% of the extra money you make comes from changes that happened to the land after you bought it.

These changes could be things like:

  • New rules about how the land can be used
  • Getting permission to use the land in a different way
  • Changes made by the Environment Court
  • Removing restrictions on how the land can be used

However, you don’t have to pay this tax if the land was your home or if it was farmland.

If you’re not sure if you need to pay tax, it’s a good idea to ask an adult for help.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512437.

Topics:
Money and consumer rights > Taxes
Housing and property > Land use
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CB 13: Disposal: amount from major development or division and not already in income, or

“Taxable income from selling land after major development or division”

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CB 15: Transactions between associated persons, or

“Rules for selling or gifting land to people you're connected with”

Part C Income
Income from business or trade-like activities

CB 14Disposal: amount from land affected by change and not already in income

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

  2. the amount is not income under any of sections CB 6A to CB 12; and
    1. the person disposed of the land within 10 years of acquiring it; and
      1. the total amount that they derive from its disposal is more than the cost of the land; and
        1. at least 20% of the excess arises from a factor, or more than 1 factor, that—
          1. relates to the land; and
            1. is described in subsection (2); and
              1. occurs after the person acquired the land, for the factors described in subsection (2)(c), (e), (g), and (i).

              2. The factors referred to in subsection (1)(d) are—

              3. the rules of an operative district plan under the Resource Management Act 1991:
                1. the likelihood of the imposition of rules:
                  1. a change to the rules:
                    1. the likelihood of a change to the rules:
                      1. a consent granted under the Resource Management Act 1991:
                        1. the likelihood of a consent being granted:
                          1. a decision of the Environment Court made under the Resource Management Act 1991:
                            1. the likelihood of a decision being made:
                              1. the removal of a condition, covenant, designation, heritage order, obligation, prohibition, or restriction under the Resource Management Act 1991:
                                1. the likelihood of the removal of a condition, covenant, designation, heritage order, obligation, prohibition, or restriction:
                                  1. an occurrence of a similar nature to any of the occurrences described in any of paragraphs (a) to (j):
                                    1. the likelihood of an occurrence of a similar nature to any of the occurrences described in any of paragraphs (a) to (j).

                                      1. Subsection (1) is overridden by the exclusions for residential property in section CB 18 and for farm land in section CB 22.

                                      Compare
                                      Notes
                                      • Section CB 14(1)(a): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                                      • Section CB 14(1)(a): amended (with effect on 27 March 2021), on , by section 8 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                                      • Section CB 14(1)(a): amended (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on , by section 6(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
                                      • Section CB 14(2)(a): amended, on , by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
                                      • Section CB 14(2)(e): amended, on , by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
                                      • Section CB 14(2)(g): amended, on , by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
                                      • Section CB 14(2)(i): amended, on , by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).