Te tango RLWT hei tangata kaiponu Deducting RLWT as a withholder

If you're a withholder you'll deduct residential land withholding tax (RLWT) for the offshore RLWT person.

Your role within the process is done when the RLWT is paid to us.

Check if RLWT should be deducted from the property sale

You'll need to deduct RLWT from the property sale profit if the:

• sale amount is paid or payable, excluding deposits or part payments that total less than 50% of the sale amount
• property disposed of is residential land in New Zealand
• seller is an offshore RLWT person
• bright-line test applies because the property is sold within the bright-line period.

Bright-line period

For property sold on or after 1 July 2024, the bright-line test looks at whether your bright-line end date for the property is within 2 years of your bright-line start date.

For property sold before 1 July 2024, it will come under the bright-line test if you acquired it on or after 29 March 2018 and it is sold within 5 years.

The bright-line test

How to check if RLWT needs deducting

You cannot deduct RLWT without a signed Residential land withholding tax declaration - IR1101 and supporting documents from the seller. You'll need the same for companies, trusts and limited partnerships.

When the seller does not give an IR1101 form

If the seller does not give you an IR1101 or it's incomplete, assume they're an offshore RLWT person. They'll need to meet other withholding requirements.

This means you deduct RLWT from the residential land purchase amount. This will ensure you avoid any penalties as the withholder.

Deduct RLWT before any other payments

You'll need to calculate, deduct and pay RLWT to us before any other payments are made. The only exceptions are payments to cover:

• any mortgage or other security with a New Zealand-registered bank or licensed non-bank deposit taker against the property
• outstanding local authority rates.