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Income Tax Act 2007

Timing and quantifying rules - Allocation of deductions for excess residential land expenditure - Exclusions from rules

EL 10: Exclusion for land held on revenue account

You could also call this:

“When land sales rules apply to residential property”

You don’t need to follow Section EL 4 for some types of residential land. This applies in two cases:

  1. If you sell the land and it counts as income under Section CB 7 (which is about land you bought for a business related to land).

  2. If you sell the land and it counts as income under any other land sales rules, no matter when you sell it.

For the second case, you need to do two things:

  1. Tell the tax office (the Commissioner) that you’re holding the land to make money from it. You need to do this by the time you file your tax return for the year you bought the land, or the year it became land that would count as income when sold, or the 2019-2020 tax year if you already owned it then.

  2. Keep track of any costs related to the land separately.

You don’t need to keep separate records if all your residential land (except for some special types) either:

  1. Has already given you income under the land sales rules, or

  2. Will give you income under these rules when you sell it, and you’ve told the tax office about it.

Remember, these rules are about when you don’t have to follow Section EL 4 for your residential land.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS223682.

Topics:
Money and consumer rights > Taxes
Housing and property > Buying and selling homes
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EL 9: Main home exclusion, or

“Tax rule exemption for residential land used mainly as your home”

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EL 11: Exclusion for property held by certain persons and entities, or

“Certain big companies and government groups don't have to follow residential land rules”

Part E Timing and quantifying rules
Allocation of deductions for excess residential land expenditure: Exclusions from rules

EL 10Exclusion for land held on revenue account

  1. Section EL 4 does not apply to residential land of a person that, when disposed of, will give rise to income of the person under section CB 7 (Disposal: land acquired for purposes of business relating to land).

  2. Section EL 4 does not apply to residential land of a person that, when disposed of, will give rise to income of the person under the land sales provisions other than section CB 7, regardless of when the disposal occurs.

  3. In order for land to be excluded under subsection (2), the person must—

  4. notify the Commissioner that the land is held on revenue account by the date for filing their return of income for the later of—
    1. the income year in which they acquire the land:
      1. the income year in which the land becomes land that, when disposed of, will give rise to income under the land sales provisions:
        1. for land that is held at the start of the 2019–20 income year and is land that, when disposed of, will give rise to income under the land sales provisions, the 2019–20 income year:
        2. be able to identify separately the deductions relating to the land.

          1. Subsection (3)(b) does not apply to a person if all of their residential land, other than land excluded under subsection (1) and sections EL 9, EL 12, and EL 13,—

          2. has given rise to income of the person under the land sales provisions:
            1. will give rise to income under the land sales provisions, regardless of when the disposal occurs, and they have notified the Commissioner as described in subsection (3)(a).

              Notes
              • Section EL 10: inserted (with effect on 1 April 2019), on , by section 62(1) (and see section 62(2) and (3) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).