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Income Tax Act 2007

Recharacterisation of certain transactions - Transfers of relationship property

FB 3A: Residential land

You could also call this:

“Rules for transferring residential land in relationship property settlements”

When you transfer residential land as part of a relationship property settlement, there are special rules that apply. These rules are important for the bright-line test for residential land and for working out deductions.

If you transfer residential land in this way, it’s treated as if you sold the land and then bought it again. The amount you’re considered to have sold and bought it for is the same as what it originally cost you.

If you receive the land in the transfer, you’re treated as if you bought it on the same date the person who transferred it to you originally bought it. This is important for the bright-line test, which looks at how long you’ve owned the land.

These rules help to make sure that transferring property in a relationship settlement is treated fairly for tax purposes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6663126.

Topics:
Money and consumer rights > Taxes
Housing and property > Buying and selling homes
Family and relationships > Marriage and partnerships
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“Land transferred in relationship property settlements”

Part F Recharacterisation of certain transactions
Transfers of relationship property

FB 3AResidential land

  1. This section applies for the purposes of sections CB 6A and CB 16A (which relate to the bright-line test for residential land), and Part D (Deductions) when residential land is transferred on a settlement of relationship property.

  2. The transfer is treated as a disposal and acquisition for an amount that equals the total cost of the residential land to the transferor at the date of transfer.

  3. The transferee is treated as having acquired property in the residential land on the relevant date, for the transferor’s acquisition, in section CB 6A.

Notes
  • Section FB 3A: inserted (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 12(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
  • Section FB 3A(1): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
  • Section FB 3A(1): amended (with effect on 27 March 2021), on , by section 61(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
  • Section FB 3A(1): amended, on , by section 115(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
  • Section FB 3A(3): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).