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Income Tax Act 2007

Recharacterisation of certain transactions - Distribution, transmission, and gifts of property

FC 9: Residential land transferred to executor, administrator, or beneficiary on death of person

You could also call this:

“What happens to a person's home when they die and it's passed to someone else”

When someone dies, their residential land might be transferred to someone else, like the person looking after their estate or a beneficiary. This can happen when the circumstances described in section FC 1(1)(a) or (b) apply and section FC 5 does not apply. You need to know what rules apply to this transfer.

If residential land is transferred when someone dies, section CB 6A does not apply to the transfer. This section is about the bright-line test for residential land. You can find more information about this in section CB 6A(5)(c).

If the person who gets the land then sells it and earns income, the cost of the land is what the deceased person paid for it. The cost also includes any other expenses related to the land that the person, the deceased person, or the administrator or executor paid, as long as they did not already get a tax deduction for it.

In some cases, if the beneficiary of the deceased person transfers the land to someone else who then sells it, section CB 6A still does not apply. This happens when the land is transferred to a person who is a recipient as described in subpart FD.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6663140.

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"Rules for transferring financial arrangements after death"

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FC 9B: Residential land: certain transferors, or

"Rules for some people transferring residential land, ending 1 July 2024"

Part F Recharacterisation of certain transactions
Distribution, transmission, and gifts of property

FC 9Residential land transferred to executor, administrator, or beneficiary on death of person

  1. This section applies in the circumstances described in section FC 1(1)(a) or (b) when residential land is transferred on a person’s death and section FC 5 does not apply.

  2. Section CB 6A (Disposal within 2 years: bright-line test for residential land) does not apply to the transfer of residential land (see also: section CB 6A(5)(c)).

  3. If the residential land is transferred to a person who disposes of it, and the person derives income, the cost of the land to the person is—

  4. the cost of the land incurred by the deceased person; and
    1. all other expenditure incurred by the person, the deceased person, or the administrator or executor of the deceased person, as applicable, for which no deduction has been allowed.

      1. Despite subsection (3), if the residential land is transferred by a beneficiary of the deceased person to a person who is a recipient as described in subpart FD, and the person disposes of it, section CB 6A does not apply to the disposal.

      Notes
      • Section FC 9: 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 15(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
      • Section FC 9(2): replaced, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
      • Section FC 9(2): amended (with effect on 1 July 2024), on , by section 60(a) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
      • Section FC 9(2): amended (with effect on 1 July 2024), on , by section 60(b) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
      • Section FC 9(4) heading: inserted (with effect on 27 March 2021), on , by section 66(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section FC 9(4): inserted (with effect on 27 March 2021), on , by section 66(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
      • Section FC 9(4): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).