Property GST overview · Inland Revenue and GST Act 1985

GST on Property Sales NZ

When 15% GST applies to real estate, when compulsory zero rating applies, and how going concern sales are treated.

Property transactions in New Zealand can attract GST, and the rules are among the most complex in our tax system. Whether you are selling a commercial building, developing land, transferring farmland, or disposing of a family home, understanding when GST applies to property sales is crucial. Unexpected tax bills can run into hundreds of thousands of dollars.

This guide covers GST on land and property sales, including compulsory zero rating, going concern, and the differences between residential and commercial property. Figures are working papers. GSTCalc.nz is not Inland Revenue. Ads may fund this free site. This is not tax advice.

Professional advice recommended

Property GST is highly complex and fact specific. Always talk to a registered tax professional or property lawyer before you settle. Official starting point: Inland Revenue’s GST on property transactions page. Category home: Property and Assets GST Hub.

When GST applies to property

GST applies to a property sale when all three conditions are met:

The seller is GST registered Or is required to be registered.

The property was used in a taxable activity Commercial use, development, farming, and similar.

The sale is made in the course of that activity Not a private or isolated transaction.

GST usually applies

Commercial and industrial buildings
Retail premises and offices
Farmland used in a farming business
Development land for subdivision
Mixed use properties (commercial part)

GST usually does not apply

Private family home (principal residence)
Residential rental investment properties
Property owned personally, not in business
Inherited property (most circumstances)

Family section and backyard subdivision questions sit in subdivision of the family section NZ. Land tests in detail: zero rating of land transactions NZ.

Compulsory zero rating rules

When both parties to a property transaction are GST registered and the buyer will use the property for taxable purposes, the sale must be zero rated (charged at 0% GST).

Compulsory zero rating

Applies when both parties are GST registered and the buyer uses the property for a taxable activity.

Conditions for compulsory zero rating

Under section 11(1)(mb) of the GST Act 1985, zero rating is compulsory when:

The seller is GST registered and selling in the course of their taxable activity
The buyer is GST registered
The buyer intends to use the property for making taxable supplies
The property will not be used as a principal place of residence by the buyer or an associate

Why zero rate?

Without zero rating, the buyer would pay 15% GST on the property price at settlement (potentially hundreds of thousands of dollars), then wait to claim it back on their next GST return. Compulsory zero rating removes that cash flow burden. If you only need to add or strip 15% on a figure already in the GST net, use the free GST calculator.

Zero rating written statement

For zero rating to apply, the buyer must provide a written statement to the seller (usually in the Agreement for Sale and Purchase) confirming:

Their GST registration number
That they are acquiring the property for making taxable supplies
That the property will not be their (or an associate’s) principal place of residence

Use case: commercial warehouse

Situation: Business A sells a commercial warehouse to Business B for $2,000,000. Both are GST registered. The warehouse was used in a taxable activity. Business B will use it for a storage business. It is not a residence. GST: compulsory zero rating applies, $0 GST payable. Action: complete the GST schedule on the agreement and confirm registration numbers before settlement.

Going concern

A going concern sale is when a business (or part of a business) is sold as a functioning entity and the buyer continues the same taxable activity. Property can qualify as a going concern when it is sold with an existing income producing activity.

Part of a taxable activity The property must be used in a business.

Buyer will continue the activity For example tenants remain, or farming continues.

Written agreement Both parties agree in writing it is a going concern.

Everything necessary included All assets needed to operate the business.

Both parties GST registered Standard requirement.

Use case: leased commercial building

Situation: a commercial building is sold with three existing long term tenants. The seller transfers all leases. The buyer will keep collecting rent (a taxable activity). Both parties are GST registered. GST: going concern, sale is zero rated. Action: record the going concern agreement in writing, then still check whether compulsory zero rating of land also applies.

Since compulsory zero rating of land from 2011, going concern is less often the main rule, but it still matters for some deals. Work the land tests in zero rating of land transactions NZ.

Residential vs commercial property

GST treatment differs between residential and commercial property:

Property type	Rental income	Sale GST treatment	Notes
Family home	N/A	No GST	Not a taxable activity
Residential rental	GST exempt	Usually no GST	Exempt activity, usually no GST on sale
Commercial building	15% GST	15% or zero rated	Depends on buyer status
Farmland	N/A (farming income)	Usually zero rated	If buyer continues farming
Development land	N/A	15% or zero rated	Developer activity is taxable
Bare land	N/A	Depends	Based on seller’s taxable activity

Mixed use properties

A shop with an upstairs flat needs careful apportionment. The commercial portion may attract GST while the residential portion is exempt. Get professional advice before you sign.

Practical examples

Scenario A

15% GST

GST registered seller to a buyer who is not GST registered.

Scenario B

0% zero rated

Both registered, buyer uses the property for business.

Scenario C

No GST

Private or personal sale, not a taxable activity.

Scenario: GST impact on a buyer who is not registered

A developer (GST registered) sells a new house to a private buyer:

Sale price: $800,000 plus GST
GST component: $800,000 × 15% = $120,000
Buyer pays: $920,000 total

The buyer cannot claim the GST back because they are not registered. That is one reason a new build can look dearer than an equivalent second hand property. Check the split on the GST calculator.

Change in use adjustments

If a property’s use changes after a zero rated purchase, the buyer may need to make a change in use adjustment that triggers a GST liability.

Critical risk

If a buyer obtains zero rating by representing they will use the property for taxable purposes, then converts it to exempt or private use (for example they move in as a residence), they must account for GST on the change in use. On a $2 million property, that can mean a $300,000 unexpected tax bill.

Frequently asked questions

Do I pay GST when selling property in NZ?

It depends on the circumstances. GST applies if you are GST registered and selling property that was used in a taxable activity (commercial, farming, development). Private residential sales are typically not subject to GST. See Inland Revenue’s property GST guidance for details.

What is compulsory zero rating for property?

When both the buyer and seller are GST registered, and the buyer intends to use the property for taxable purposes (not as a residence), the sale must be zero rated at 0% GST. This prevents large cash flow impacts where buyers would otherwise pay 15% GST and wait to claim it back.

What is a going concern property sale?

A going concern sale transfers a property as part of an operating business where the buyer will continue the same taxable activity, for example selling a commercial building with existing tenants who remain in place. Going concern sales are zero rated under specific conditions.

Is GST included in NZ property prices?

Property prices in New Zealand are typically quoted as plus GST if any. This language alerts buyers that GST may apply depending on the seller's circumstances. Always clarify with your lawyer whether GST applies and whether you can claim it back.

Does GST apply to residential rental property sales?

Generally no. Residential rental income is exempt from GST, so selling a residential rental property typically does not attract GST. There are exceptions, particularly if the property was previously used for taxable purposes or involves complex ownership structures.

What happens if the buyer's circumstances change after a zero rated sale?

If a buyer represented they would use the property for taxable purposes but then changes to a different use (for example a private residence), they must account for GST through a change in use adjustment. This can create a significant tax liability, potentially 15% of the property value.

Official guidance: Inland Revenue GST on property transactions. Publisher path: About Us and Contact Us.

Last verified 9 February 2026 against Inland Revenue GST on property transactions and the Goods and Services Tax Act 1985 s 11(1)(mb). Layout rebuilt 11 September 2026 so the page uses GSTCalc.nz styles. Ads may fund this free site. Not tax advice.