Application of the Land Sale Rules to Co-Ownership Changes and Changes in Trustees

On 14 Jun 2022 IRD released an interpretation statement IS 22/03. This statement confirms that for ownership change to be effected a complete alienation of property must be made. In other words one persons loses the ownership of the land and another person gains a corresponding interest in that land.

In summary:

A change to the form of ownership that does not result in a change of proportional ownerhsip will not give rise to disposal for the purposes of land taxing provisions.
If there is a transfer between co-owners where no owners interest is fully alienated but the proportional ownership is affected, there will be a disposal for the person whose ownership interest was reduced.
If there is a transfer where either a new co-owner is added or a co-owner is removed, there will be a disposal for the person losing their ownership interest.
IRD maintains that where parties own a block of land as tenants in common the division of that land so as to provide each party with a title equivalent to their former share in the larger block will constitute a change of ownership.

OTHER NOTICES

In case you or your loved ones qualify for the Cost of Living Payment that will be paid from 01 August 2022 you do not need to separately apply to IRD for this payment. If you are eligible IRD will pay this automatically to the bank account that they hold on file once your 2022 income tax return has been filed

July 2022