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Residential land withholding tax Tāke Rawa Kāinga

Residential land withholding tax certificate of exemption

If you're an offshore RLWT person there are some situations where you may qualify for an exemption from paying residential land withholding tax (RLWT). This means you will not have RLWT deducted from your property sale.

Qualifying for an exemption

You may qualify for an exemption if you're in the business of developing land into lots or erecting buildings and have:

  • provided an acceptable security to us, or
  • had and met all your tax obligations under the Inland Revenue Acts for the two years before applying. These must include business tax obligations, such as:
    • filing your employer returns and making employer tax payments (if registered as an employer)
    • filing GST returns and making GST payments
    • making provisional tax payments.

If you qualify for an exemption, the income from the sale will still need to be included in your end-of-year income tax return. This may result in tax to pay.

You may also qualify for an exemption if you're:

  • an individual or trust, and
  • selling a property eligible for the main home exclusion under the bright-line test, meaning you'll be exempt from paying tax on the sale.

Acceptable security

This could include a bank bond, mortgage against real property, or a surety or bond from a finance entity/provider. You may also have another type of security you'd like to provide.

How to apply for a certificate of exemption

You need to complete an Application for exemption from residential land withholding tax (RLWT) (IR1103). Send it to us with any other accompanying documents outlined on the application form.

The COE will only apply to the property(s) you list on your application form. You'll need to apply again if you have more property(s) you'd like to be exempt from RLWT at a later date.

Subdivisions - off the plan sales

If you're subdividing (or going to be) you need to apply for a COE for each individual piece of subdivided land.

You can do this by completing:

  • one IR1103 outlining all pieces of land the exemption applies to, or
  • separate IR1103 forms for each piece of land.

If each individual piece of land does not have its own Certificate of Title you'll need to include a copy of:

  • the subdivision plan, eg, master, sale or survey plan
  • any other accompanying documents outlined on the IR1103.

The subdivision plan needs to outline the allocated number or letter of the individual piece(s) of land that the exemption is being applied for.

Once you have your certificate of exemption

When you have your COE show it to your withholder at the same time you give them your completed Residential land withholding tax declaration (IR1101). This will make sure they do not deduct RLWT from your property sale. They'll need to keep a copy for their records.