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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 27: Amount from major development or division and not already in income

You could also call this:

“Tax deduction for land value in major development projects not counted as income elsewhere”

If you make money from a major development or division of land, as described in section CB 13, and this money isn’t counted as income anywhere else in the law, you can claim a deduction for the value of the land. To work out how much you can deduct, imagine you sold the land to someone you don’t know just before you started the development or division, and then bought it back right after you started. The amount you can deduct is what the land was worth at that time. This rule adds to the general permission for deductions, but you still need to follow the general limitations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513637.

Topics:
Money and consumer rights > Taxes
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DB 26: Amount from profit-making undertaking or scheme and not already in income, or

“Claiming deductions for profits from activities not covered by other tax rules”

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DB 28: Amount from land affected by change and not already in income, or

“Money from selling land affected by change can be deducted if not already counted as income”

Part D Deductions
Specific rules for expenditure types

DB 27Amount from major development or division and not already in income

  1. This section applies when a person derives income under section CB 13 (Disposal: amount from major development or division and not already in income) that is not their income under any other provision of this Act.

  2. The person is allowed a deduction for the value of the land, as determined under subsection (3).

  3. For the purpose of determining the amount of the deduction, the person is treated as—

  4. having disposed of the land to an unrelated third party immediately before the start of the undertaking or scheme; and
    1. having reacquired it immediately after the start of the undertaking or scheme at the market value of the land at the time.

      1. This section supplements the general permission. The general limitations still apply.

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