Dwelling vs commercial dwelling NZ: GST meaning and curtilage
What is a dwelling NZ for GST is not “does it look like a house”. The GST Act 1985 tests how the premises are occupied: principal place of residence plus quiet enjoyment. A commercial dwelling sits on a statutory list. A shop, a farm paddock, or a Building Code housing class is a different file.
Dwelling meaning NZ in property talk is loose. People say house, home, residential, or dwelling as if they were the same word. For GST, dwelling meaning property sits in section 2. The dwelling definition NZ was narrowed from 1 April 2011 so that renting a home and owning a home stay on a similar footing. If the stay is in a commercial dwelling, GST usually applies. If it is accommodation in a dwelling, rent is generally exempt and you cannot claim GST on rates, insurance, or maintenance for that use.
| Label | What Inland Revenue tests | Usual GST on accommodation |
|---|---|---|
| Dwelling | Principal place of residence, quiet enjoyment, plus appurtenances (garden, yard, curtilage) | Exempt. No GST on long term rent. No GST claim on those dwelling costs. |
| Commercial dwelling | Hotel, motel, homestay, farmstay, bed and breakfast, inn, hostel, boarding house, certain managed serviced apartments, rest home style premises, camping ground, or similar | Taxable. Charge GST on domestic goods and services. |
| Non dwelling (shop, office, factory, farmland outside curtilage) | Used mainly for business or industrial purposes, or land that does not belong to the house | Usually taxable rent or a taxable land supply. Not the dwelling exemption. |
The 2011 boundary
Tax Technical’s 2010 article on supplies of accommodation records that from 1 April 2011 a dwelling needs a principal place of residence and quiet enjoyment under section 38 of the Residential Tenancies Act 1986. A commercial dwelling is carved out, even if someone lives there most of the time. Category home: Property & Assets GST Hub.
Dwelling definition NZ in the GST Act
IS 20/05 reprints the current section 2 definition. For a person, a dwelling means premises as defined in section 2 of the Residential Tenancies Act 1986 that the person occupies, or that it can reasonably be foreseen they will occupy, as their principal place of residence, and in relation to which they have quiet enjoyment. Premises can include part of a building, land and appurtenances other than facilities, and a mobile home or caravan intended for occupation on the land.
Principal place of residence, in that dwelling definition, means a place the person occupies as their main residence for the period of the accommodation agreement. One person has one main residence at a time. Boarders who live in the same premises as the supplier can still be in a dwelling even if quiet enjoyment is awkward. Appurtenances belonging to or used with the premises travel with the dwelling. Certain retirement village or rest home units stay in the dwelling definition when the payment is for the right to occupy. A commercial dwelling is always excluded.
Quiet enjoyment, as Tax Technical explains it, is the Residential Tenancies Act idea: the occupier is entitled to enjoy the premises without interruption by the landlord, and the landlord must not interfere with reasonable peace, comfort, or privacy. That is the dwelling meaning NZ that matters for GST, not the marketing brochure. Landlord rent walkthrough: GST on residential rent in NZ.
Commercial dwelling versus a house that looks residential
A commercial dwelling is a listed kind of premises, plus premises of a similar kind. IS 20/05 lists: hotel, motel, homestay, farmstay, bed and breakfast establishment, inn, hostel, or boarding house; a serviced apartment managed or operated by a third party with extra services and no quiet enjoyment; a convalescent home, nursing home, rest home, or hospice; a camping ground; and similar premises. It excludes a hospital except to the extent the hospital is a residential establishment, and it excludes those retirement units already treated as a dwelling.
Inland Revenue’s difference between commercial and residential property page (last updated 21 June 2024) says some properties that provide beds are still commercial: hotels, motels and boarding houses if they meet the tests; hospitals, nursing homes and hospices; rest homes and retirement villages except independent living; camping grounds; and some serviced apartments. Serviced apartments are commercial if they are managed by someone besides the owner or occupier, and the person living there cannot enjoy reasonable peace, comfort and privacy. Otherwise they are residential.
IRD’s special supplies page is blunt: accommodation in a dwelling such as a residential tenancy is exempt. GST registered hotels, motels, other commercial dwellings, hospitals or short term providers must charge GST on domestic goods and services. If a guest stays for 4 weeks or more, the GST maths depends on whether the premises is a residential establishment. Public ruling BR Pub 24/01 quotes section 10(6): the value of that domestic goods and services slice can be treated as 60% of the amount that would apply if tax were charged at 9%, which is an effective 9% GST after the first 4 weeks in the ordinary case. Inland Revenue’s short stay marketplace page says that reduced rate does not apply when the stay is supplied through an online marketplace. From 1 April 2024 those platforms collect GST at 15% and, if you are not registered, pass on an 8.5% flat rate credit. Hosts: Airbnb and short term rentals.
Difference between dwelling and non dwelling
Dwelling vs non dwelling is not “house versus shop” on the district plan. A non dwelling for this GST split is anything that is not a dwelling under section 2: the commercial dwelling list, or land and buildings that are not occupied as a principal place of residence with quiet enjoyment. Inland Revenue’s commercial versus residential page treats a factory, shop or office as commercial: you usually charge GST when you rent it, and you can claim depreciation on the building for income tax. A house, apartment or flat used to give people a home is residential: you usually cannot charge or claim GST on long term rent.
Exempt supplies guidance adds a sale rule. If a residential dwelling is sold as part of a taxable activity, and it was rented for at least 5 years beforehand, the sale is an exempt supply under section 14(1)(d). If a developer later rents a property that was bought to make taxable supplies, a change of use adjustment may be required. Conversion of an office into long term residential rent is the forum trap: you claimed GST because it was commercial, then the use becomes an exempt dwelling supply, so you repay GST. Change of use: GST change of business use. Commercial rent: commercial property GST guide.
Dwelling consents NZ are not the GST test
MBIE’s Building Performance page for clause A1 classified uses groups buildings as housing, communal residential, communal non residential, commercial, industrial, outbuildings, and ancillary. That classification lives in Schedule 1 of the Building Regulations 1992 and drives building consents and change of use under the Building Act. A council housing consent does not make the premises a GST dwelling. A motel consent does not, by itself, prove a commercial dwelling. Use the GST Act occupation tests, then check consents as a separate compliance file.
Dwelling and curtilage, and how you value it
Dwelling and curtilage is the house plus the land and buildings that belong to it. IS 20/05 says a principal place of residence includes appurtenances belonging to or used with it, consistent with paragraph (b)(ii) of the dwelling definition. Curtilage, quoting IS 17/02 inside IS 20/05, is the land surrounding the farmhouse used primarily for private purposes. It may be fenced like a backyard, or not. A landscaped garden with a pool and tennis court stays in the curtilage even if those areas are fenced for safety. A fenced horse paddock physically separated from the house is not curtilage. The home paddock in IS 20/05 Example 1 is not part of the main farmhouse curtilage because it is physically divided off.
Dwelling and curtilage valuation is how you split a mixed sale: farm plus houses, shop plus flat, home plus holiday cottage. Section 5(15) deems a principal place of residence, and a section 14(1)(d) dwelling, to be separate supplies from the other real property in the same deal. The focus is the vendor’s current use, not the purchaser’s plan. Section 10(18) says the consideration is the part properly attributable to each supply. IS 20/05 wants open market value. Inland Revenue will accept a valuation, a reasonable estimate of the value of the curtilage, or an apportionment based on land area, provided it is fair. Land value of curtilage is often proportionately higher than the rest of a farm, so a blunt per hectare split can fail.
Pull highlight: Ideally the valuation is by a registered valuer, with the method and reasons written down. In cases of doubt or significant consideration, Inland Revenue may insist on that. A QV dwelling and curtilage valuation search usually lands on QV’s desktop report for tax or trust work, or a full market valuation. Those products can feed the apportionment. They do not replace section 2 or section 5(15).
IS 20/05 Example 1 (labelled hypothetic): a GST registered farmer sells a 225 hectare farm with two farmhouses for $2 million plus GST. A registered valuer puts farmland at $1.4 million, the main house at $250,000, and the second house at $200,000. The parties then agree $1.5 million for the farm (zero rated under compulsory zero rating), $300,000 for the main farmhouse (standard rated, GST $45,000), and $200,000 for the second farmhouse (exempt after 5 years of employee occupation). Total including GST is $2,045,000. If you only need to add 15% on a figure already in the GST net, use the free GST calculator. Farm sales: farming and agriculture GST. Zero rating of land: zero rating of land transactions NZ.
In practice
Use case: Waikato farmhouses (IS 20/05 Example 1 shape)
Situation: Main house with a 4,000 square metre fenced garden. Second house of 4,750 square metres used by employees for more than 5 years. GST: Two residences split from the farm. Main house can be standard rated if used in the taxable activity. Second house can be exempt under s 14(1)(d). Home paddock stays with the farm. Action: Put the split on the agreement and keep the valuer’s method.
Use case: Lake Wakatipu cottage (IS 20/05 Example 2 shape)
Situation: Family home plus a fenced holiday cottage advertised year round. Cottage turnover $70,000, so the owners are GST registered. GST: House is a private principal place of residence, no output tax on sale. Cottage is in the taxable activity. If the buyer is registered and will not live there, compulsory zero rating may apply. Action: Value the two supplies even when GST on the cottage is $0.
Use case: shop with flat (IS 20/05 Example 3 shape)
Situation: GST registered retailer sells a giftshop with a two bedroom flat rented for 8 years. Buyer is GST registered and will keep the shop. GST: Shop can be zero rated. Flat is not part of the taxable activity and is not subject to GST on that sale. Action: Complete the GST schedule for both supplies. Do not let a blank residential box drag the flat into the shop rating.
The “it is still a house” trap
A weekday business apartment with no personal gear, used only to sleep between flights, can fail the principal place of residence test. A homestay or farmstay can be a commercial dwelling even though it looks like a family home. An Airbnb stay through a marketplace is not long term residential rent. And a Building Code housing class, or a dwelling consent on the council file, does not decide section 14(1)(c). PropertyTalk threads on converting commercial space to residential are about change of use, not about renaming the building.
FAQs
What is a dwelling NZ for GST?
In section 2 of the GST Act 1985, a dwelling is premises (using the Residential Tenancies Act 1986 meaning) that the person occupies, or will reasonably occupy, as their principal place of residence, and of which they have quiet enjoyment. It includes boarders in the same premises, appurtenances used with the premises, and certain retirement village units. It excludes a commercial dwelling.
What is the difference between a dwelling and a commercial dwelling?
Accommodation in a dwelling is generally an exempt supply. Accommodation in a commercial dwelling is taxable. Inland Revenue’s list of commercial dwellings includes hotels, motels, homestays, farmstays, bed and breakfast establishments, inns, hostels, boarding houses, certain managed serviced apartments without quiet enjoyment, convalescent homes, nursing homes, rest homes, hospices, camping grounds, and premises of a similar kind.
Does a QV dwelling and curtilage valuation decide GST?
No. GST follows the GST Act and IS 20/05, not a rating valuation on its own. Inland Revenue will accept a valuation, a reasonable estimate of curtilage value, or a fair land area split, and may insist on a registered valuer when the figures are large or in doubt. A QV desktop report can assist tax work. It is not a substitute for the statutory tests.
Read IS 20/05 on Tax Technical, the 2010 supplies of accommodation article, and MBIE’s A1 classified uses page. Publisher path: About Us and Contact Us.
Last verified 4 September 2026 against Inland Revenue IS 20/05, exempt supplies, special supplies, commercial versus residential property, short stay marketplace guidance, Tax Technical supplies of accommodation (2010), BR Pub 24/01, MBIE Building Code clause A1, and the GST Act 1985 definitions reprinted in IS 20/05 (dwelling, commercial dwelling, principal place of residence, ss 5(15), 8, 10(6), 10(18), 14(1)(c) and (d)). Ads may fund this free site. Not tax advice.