Selling NZ property from overseas: bright-line, RLWT and your old home

Moving overseas does not change whether a New Zealand property sale is taxed. If the sale agreement is within the bright-line period (2 years for agreements from 1 July 2024) and no exclusion applies, the gain is taxable in New Zealand. If you are an offshore RLWT person, for example a New Zealand citizen who has been overseas for three years or more, your conveyancer must also deduct residential land withholding tax at settlement. RLWT is not an extra tax: it is a credit against the tax on the gain, and any excess comes back when you file. Your old home can still qualify for the main home exclusion if you lived in it for more than half the bright-line period before you left. Rules checked 10 November 2026.

The bright-line test applies wherever you live

The bright-line test looks at the property and the dates, not where the seller lives. It taxes the profit on residential property when the sale agreement (the bright-line end date) is signed within 2 years of the date title transferred to you (the start date), unless an exclusion or rollover relief applies (IR1229 p6). Your intention when you bought does not matter.

Inland Revenue's RLWT rules are built on the same test: RLWT is deducted when an offshore person sells New Zealand residential land and "the bright-line test applies". So a seller living in Sydney or London is caught in exactly the same way as one living in Wellington.

The reverse is also true. If you are a New Zealand tax resident and buy and sell residential property overseas, the bright-line test can apply to that sale too (IR1229 p6).

If the sale agreement is signed outside the 2-year period, the bright-line test does not apply, and RLWT is not deducted either, because it only applies where the bright-line test does. Other land rules, such as the intention test, can still apply in some cases. Check your dates with the bright-line end date finder.

Who is an offshore RLWT person

Inland Revenue's offshore people who pay RLWT page sets out who counts:

This is a separate test from tax residence. A citizen who left New Zealand 18 months ago is not an offshore RLWT person, though they may well be non-resident for tax. Whether you are resident affects your other income, not whether the bright-line test applies to the property.

How RLWT is worked out and deducted

According to IRD's page on when RLWT is deducted (updated 16 April 2026):

• Who deducts it. Your conveyancer (lawyer or law firm) is the withholder. If you have none, the buyer's conveyancer deducts it; if the buyer has none, the buyer must.
• When. Once deposits and part payments reach 50% or more of the price, usually at settlement. A 10% deposit alone does not trigger it.
• Exceptions. No RLWT on inherited property, transfers to or from a deceased estate, relationship property settlements, or if you hold a valid certificate of exemption.
• Paperwork. You must complete an IR1101 form even when no RLWT is deducted.
• Co-owners. Only the offshore person's share is subject to RLWT.

The three calculations

IRD's working out RLWT page tells the withholder to do three calculations, excluding GST, and deduct the lowest:

1. Sale price x 10%.
2. The greater of zero and (sale price less the price you originally paid) x the RLWT rate. From 1 April 2021 the rate is 39% for individuals, trusts and companies acting as trustees, and 28% for companies and incorporated clubs and societies.
3. For your own conveyancer: the sale price less any mortgage held by a New Zealand registered bank or licensed non-bank deposit taker, less unpaid rates (or zero if that is lower).

Calculation 2 uses only the purchase price, not your other costs, so RLWT is often more than the tax you finally owe.

Worked example: Tama sells from Melbourne

Tama, who holds a New Zealand residence class visa, takes title to a Wellington house on 7 April 2025 for $780,000, paying $3,000 in purchase costs. He lives there until 20 December 2025, then moves to Melbourne and rents the house out. He is still overseas when he signs an agreement to sell for $900,000 on 30 November 2026, settling on 15 January 2027. Selling costs are $22,000 and his bank mortgage is $500,000.

Is the gain taxable?

The sale agreement is within 2 years of 7 April 2025, so the sale is inside the bright-line period. The main home test, from this site's engine, counts 258 days of main home use out of 603, or 42.8%. That is not more than 50%, so the exclusion does not apply.

RLWT at settlement

By settlement Tama has been overseas continuously for more than 12 months and is not in New Zealand, so as a residence class visa holder he is an offshore RLWT person. (Had he been a citizen, he would need three years away.) His lawyer works out RLWT like this:

The tax actually owed

Settlement on 15 January 2027 puts the gain in the 2026/27 income year. The net gain is $900,000 less $780,000, $3,000 and $22,000, which is $95,000. With no other income taxed in New Zealand that year, the engine gives income tax of $21,227.50 using 2026/27 rates.

Tama gets more than half the RLWT back, but only after he files. If he had any other New Zealand income, such as the rent, it would be added in and the tax would be higher. Try your own figures in the bright-line tax calculator; it works out the gain and tax, but not RLWT.

Claiming RLWT back

IRD's claiming back RLWT page (updated 12 June 2024) says:

• RLWT is a tax credit you claim "in your end of year income tax return or before the end of your income year".
• Your withholder must have paid the RLWT to Inland Revenue before you can claim it.
• If you are non-resident for tax and the sale is your only New Zealand tax obligation, you file an income tax return to get the refund. With no further obligations, you can file an early return, using the most recent year's form with the dates amended.
• The IR1102 refund form is only for people with ongoing New Zealand tax obligations, or where the repayment is for the sale of a main home.

IR1229 (p47) confirms the same from the bright-line side: RLWT deducted at settlement is claimed as a credit against the tax on the gain.

The main home exclusion after you move away

The main home exclusion does not end because you leave the country. It asks whether you used more than 50% of the land as your main home and lived there as your main home for more than 50% of the bright-line period (IR1229 pp15 to 16). Time after you leave counts against you, but time before you leave counts for you.

In Tama's example, leaving on 20 December 2025 gave 258 of 603 days, 42.8%. Had he stayed until 30 April 2026, the engine gives 389 of 603 days, 64.5%, and the whole gain would have been excluded.

Points that matter for people who move away:

• Your main home is where you live. Once you are settled overseas, your home there is likely to be your main home. You can have only one at a time.
• Family living in the house does not count. IR1229 (p17) says a family member living there, but not you, is not your main home use.
• An intention to come back is not enough. Intention to live there does not count as living there (p17).
• Selling later avoids the question. A sale agreement signed after the second anniversary of your start date is outside the bright-line period.

Even where the exclusion applies, RLWT may still be deducted if you are an offshore RLWT person: IRD's refund page refers to repayments for the sale of a main home. Talk to your conveyancer early about whether a certificate of exemption or a quick refund is possible. The main home test works out your day count.

Your new country may also tax the sale under its own rules. This is a guide, not tax advice; check with your accountant in New Zealand, and an adviser where you now live, for your situation.

Questions people ask

Does the bright-line test apply if I live overseas?

Yes. It depends on the property and the dates, not where you live. A New Zealand residential property sold within the bright-line period, with no exclusion, is taxable in New Zealand.

What is the RLWT rate?

RLWT is the lowest of three calculations: 10% of the sale price; the gain over your purchase price at 39% for individuals and trusts (28% for companies); and the sale price less a NZ bank mortgage and unpaid rates.

Is RLWT a final tax?

No. It is a credit against the income tax on the gain. You claim it in an income tax return, and anything deducted beyond the tax you owe is refunded.

I lived in the house before moving overseas. Is it still my main home?

It can qualify for the main home exclusion if you used more than 50% of the land as your main home for more than 50% of the bright-line period. Time after you leave counts as non-main home time.

Who is an offshore RLWT person?

Among others: a NZ citizen overseas continuously for three years or more, a residence class visa holder overseas for 12 months or more, and anyone without citizenship or a residence class visa.