Published on and written by Cyril Jarnias
Buying Real Estate Abroad: The Case of New Zealand
Purchasing real estate abroad can be an exciting yet complex adventure, especially in a country like New Zealand, whose market attracts numerous international investors. However, before diving into this ambitious project, it’s crucial to understand the legal and financial specifics that accompany property purchases for non-residents.
New Zealand, with its stunning landscapes and exceptional quality of life, nevertheless imposes certain restrictions on foreigners, influenced by laws designed to preserve property access for local residents.
This article will guide you through the various steps of the purchasing process, addressing essential aspects such as finding the perfect property, financing, and legal obligations, to provide you with a clear and detailed understanding of what lies ahead.
Good to Know:
New Zealand has established strict rules for property purchases by non-residents, particularly through the Overseas Investment Act. It’s essential to verify your eligibility before proceeding.
Understanding Real Estate Regulations and Obligations in New Zealand
Since the Overseas Investment Act of 2018, the New Zealand real estate market has imposed strict restrictions on the purchase of residential properties by foreigners. Only New Zealand citizens and permanent residents are permitted to acquire existing homes. Foreigners—meaning anyone without New Zealand citizenship or permanent residency—are therefore denied access to the existing property market.
A few exceptions exist:
- Certain new apartments or off-plan properties may be offered to foreign investors, but these properties are rare and generally more expensive.
- For these exceptional acquisitions, the property must be exclusively intended for rental on the local market: it cannot serve as a pied-à-terre for the foreign owner or their family.
- Other types of real estate assets (commercial, non-residential land) may sometimes be accessible under specific conditions.
Since 2025, a partial reform has been considered to relax certain rules: only high-end real estate—generally above 2 million NZD (or even 5 million NZD according to some sources)—could become eligible for non-resident buyers. This relaxation primarily aims to attract wealthy investors without compromising housing protection for locals.
The nationalities affected by these restrictions include all those who do not possess permanent legal status in New Zealand. There is no general exemption based on nationality; only a handful of highly targeted bilateral agreements might permit certain purchases in specific cases.
Tax and Administrative Obligations:
- Any potential acquisition by a foreign investor must go through an application with the Overseas Investment Office (OIO).
- The OIO process involves:
- Demonstrating that the investment will bring “substantial benefits” to the country.
- Providing detailed documentation on financial sources and the applicant’s international tax compliance.
- Potentially paying an additional tax specific to non-resident buyers if applicable to the type of property purchased.
- Complying with all mandatory declarations to the New Zealand tax authorities regarding any rental income generated locally.
Non-Compliance with Regulations:
Failure to comply with these obligations exposes the international investor to:
- Significant fines
- Outright cancellation of the transaction
- Even, in some extreme cases, a future acquisition ban
- Always consult a lawyer specialized in New Zealand real estate law before any preliminary steps
- Engage a licensed local real estate agent accustomed to international transactions
- Stay regularly informed about potential legislative changes through official websites or specialized firms
- Meticulously prepare your OIO file from the start to expedite administrative processing
| Buyer Type | Access to Existing Homes | Access to New/Off-Plan Homes | Conditions/Recent Openings |
|---|---|---|---|
| Citizen/Permanent Resident | Yes | Yes | Unrestricted |
| Foreigner/Non-Resident | No | Only certain specific projects; rental use required | Possible reform >2M/5M NZD |
Strict compliance with regulations is essential to avoid any legal or financial risks when investing in New Zealand real estate.
Good to Know:
In New Zealand, the 2018 law restricts property purchases by foreigners, primarily targeting non-residents who are neither New Zealand nor Australian citizens, the latter being exempt thanks to the free trade agreement. Individuals not falling into these categories must obtain authorization through the Overseas Investment Office (OIO), a complex process requiring demonstration of significant benefit to the country. This can include economic or environmental benefits. Regarding tax obligations, international buyers must pay specific taxes, such as the Land Transfer Tax, in addition to other administrative requirements. Rigorous compliance with these regulations is crucial to avoid fines or legal sanctions, making the assistance of a specialized lawyer or local real estate agent advisable to effectively navigate this often confusing regulatory context.
International Tax Implications for Foreign Buyers
New Zealand’s tax legislation for foreign property owners stands out for its simplicity and attractiveness. Non-resident real estate investors benefit from a tax environment where capital gains tax generally does not exist, unless the sale occurs within a specific timeframe from the property’s purchase (Bright-line test). There are no registration tax duties or inheritance tax.
Main Taxes and Obligations for Foreign Buyers
| Tax/Obligation | Description |
|---|---|
| Income Tax | Withheld at source according to a progressive scale from 10.5% to 39%. |
| Bright-line Test | Taxation of capital gains if sold within a short period after purchase (see details below). |
| IRD Declaration | Obligation to obtain an IRD number and declare rental income. |
| Tax Residency Requirement | Need to indicate tax residency during property transfer. |
The Bright-line Test: Recent Evolution
The Bright-line test imposes tax on profit realized from selling a property held for a short period. Since July 2024, this period has returned to two years: any property sold less than two years after acquisition will be subject to tax on the generated gain, except for exceptions (main home, inheritances, separation).
Implications of Double Taxation Agreements (DTA)
New Zealand has signed several tax conventions aimed at preventing foreign buyers from being taxed twice on the same rental income—once in their home country and once in New Zealand. However, these conventions only apply to situations explicitly provided for by each DTA; it is therefore essential for each foreign investor to precisely verify their obligations according to their nationality.
Rules Regarding Tax Residency
The definition of resident/non-resident status directly influences taxation:
- A non-resident is generally taxable only on their New Zealand income.
- A New Zealand tax resident must declare their worldwide income.
- The main criterion often relies on time spent in the country or the existence of significant economic ties.
Thus, becoming a tax resident can profoundly alter the overall tax impact related to real estate investments.
Additional Costs Due to International Regulatory Differences
Foreign buyers must anticipate certain additional costs:
- Potential risk of double taxation if no DTA exists or if it doesn’t cover all cases.
- Increased legal fees related to compliance with local administrative requirements specific to non-residents.
- Possibility that certain bank fees or mortgage terms differ for foreign nationals based on their tax profile.
Checklist of potential costs:
- Higher bank fees
- Additional insurance required by some lending institutions
- Specialized fees for international tax advice
Recent Tax Reforms Impacting Foreign Investors
Main developments concern:
- The shortening of the Bright-line test period (from ten years previously under certain conditions to two years since July 2024).
This measure primarily aims to promote access to the local market while limiting rapid speculation.
Key Takeaway:
Always consulting a tax expert specialized in cross-border transactions not only allows you to legally optimize your situation but also—most importantly—avoids any risk related to unintentional accumulation of tax burdens or inadvertent non-compliance with rules specific to both your country and New Zealand. Rigorous planning remains essential before any international real estate acquisition to maximize your benefits and reduce future tax risks.
Good to Know:
In New Zealand, foreign real estate buyers must be aware of several tax laws, including property transfer taxes and the impact of potential Double Taxation Agreements (DTA). Tax residency plays a crucial role in defining the tax obligations of non-residents, influencing how they are taxed on their properties. Furthermore, differences between New Zealand’s tax requirements and those of the home country can lead to additional costs that buyers must prepare for. With recent tax reforms, such as the increase in capital gains tax for foreign investors, consulting a tax expert is essential to optimize benefits and avoid costly mistakes during a real estate investment.
Essential Documents for Acquiring Real Estate in New Zealand
List of documents required for foreigners wishing to purchase real estate in New Zealand:
- Valid passport (certified copy required)
- Recent proof of address
- Proof of financial situation (bank statements, proof of fund origin, income certifications)
- Obtaining an IRD (Inland Revenue Department) number if necessary
- Prior authorization from the Overseas Investment Office (OIO), depending on the type and location of the property to be acquired
Summary Table:
| Document | Description | Mandatory for All Buyers? |
|---|---|---|
| Passport | Certified copy required to prove identity | Yes |
| Proof of Address | Recent bill or official certificate | Yes |
| Proof of Financial Situation | Bank statements, proof of fund origin, bank certifications | Yes |
| IRD Number | New Zealand tax number | Often |
| OIO Approval | Mandatory prior agreement depending on property nature and buyer status | Case by case |
Procedure with the Overseas Investment Office (OIO)
OIO authorization is essential for any purchase involving certain “sensitive” properties or if the buyer is not a permanent resident or New Zealand citizen. This process includes:
- Complete file on fund provenance
- Verification of investment project and compliance with local legislation
Real Estate Due Diligence to Perform Before Purchase
List of essential steps:
- Independent technical inspection report on the property (general condition, specific diagnostics such as asbestos or moisture presence)
- Official valuation conducted by a registered valuer to determine the property’s real value
- Complete legal verification by a local lawyer regarding land titles, potential charges, and easements
Other recommended checks:
- Consultation of cadastral plans and documents related to urban zoning
- Check with the local council regarding any undeclared work
Additional Documents That May Be Required
Depending on the buyer’s particular profile or status and the specific nature of the targeted property:
- Foreign tax certificate in case of massive use of external capital
- Official translations if certain proofs are not in English
- Specific certifications when financing comes from a foreign company
This rigorous administrative framework aims to guarantee transparency and security during real estate transactions involving foreign investors.
Good to Know:
To acquire real estate in New Zealand as a foreigner, it is crucial to possess certain essential documents, including a valid passport and proof of financial situation demonstrating your ability to make the purchase. Authorization from the Overseas Investment Office (OIO) may also be necessary, especially for non-urban land or high-value properties. In terms of due diligence, it is recommended to conduct comprehensive property inspections, including real estate inspection reports and professional valuations to avoid unpleasant surprises. Depending on the buyer’s status (e.g., foreign investor or temporary resident) and the type of property (residential, commercial, or agricultural land), additional documents might be required to ensure compliance with local regulations. Being prepared and well-informed may sometimes require the intervention of a specialized legal advisor to guide you through this complex process.
Can Foreigners Really Become Property Owners in New Zealand?
In New Zealand, the foreign investment law (Overseas Investment Act), strengthened in 2018, strictly regulates the purchase of real estate by foreigners. The main objective is to limit foreign speculation and protect housing access for local residents.
Categories of Foreign Residents and Property Access
- New Zealand citizens: unrestricted access to all property types.
- Permanent residents or long-term visa holders: access similar to citizens.
- Australian and Singaporean citizens: benefit from bilateral agreements allowing them to freely purchase existing properties.
- Non-residents (other nationalities):
- General prohibition on purchasing existing homes.
- Possible access to new “off-plan” apartments in residential complexes with more than 20 units, provided the developer has obtained a specific exemption and a maximum of 60% of units are sold to non-residents.
Summary Table – Access by Status
| Category | Purchase Existing Home | Purchase New “Off-Plan” | Specific Conditions |
|---|---|---|---|
| NZ Citizen | Yes | Yes | None |
| Permanent Resident / Long-Term Visa | Yes | Yes | None |
| Australian/Singaporean | Yes | Yes | Bilateral Agreement |
| Non-Resident | No* | Yes* | OIO Exemption + Quotas/Max Resale |
Exceptions and Role of the Overseas Investment Office (OIO)
Certain exceptions exist:
- Investment in certain new real estate programs with exemption granted by the OIO.
- Special cases for projects with major economic impact or concerning the hotel/commercial sector.
The OIO must approve any residential real estate purchase by a non-exempt foreigner. This procedure involves a detailed file, financial justifications, proof of compliance with the authorized quota for the concerned project, and a thorough verification of the buyer’s profile.
Main Administrative Steps
- Verify eligibility according to category (citizenship/residency).
- Identify accessible properties (new off-plan apartments benefiting from an exemption).
- Obtain a preliminary letter from the developer confirming available quota for non-residents.
- Prepare a file for the OIO including financial documents, personal justifications, real estate developer certification.
- Wait for formal decision before any definitive transaction.
Types of Accessible Properties
– New apartments only (“off-plan”) in large residential complexes (>20 units), provided less than 60% are sold to non-residents and the project is validated by competent authorities.
Existing individual homes are exclusively reserved for New Zealand/Australian/Singaporean citizens or holders of long-term permits/living in New Zealand for several years.
Potential Restrictions on Resale
Properties purchased under derogatory regimes must generally be put up for local rental only; it is prohibited for the foreign owner or their immediate family to personally stay there as long as they remain non-permanent residents. In case of quick resale (In 2025, only a few dozen new apartments were acquired each quarter by foreign investors through this derogatory scheme; they represent less than 2% of the total current New Zealand residential market, whereas before 2018 this figure was close to 10%. The average price paid by these investors often exceeds that paid locally because these homes are rare and highly regulated.
> An expected increase (+3.8%) was announced early 2025 for the overall market but mainly concerns domestic transactions; little direct impact related to foreign purchases, which remain heavily restricted.
⚠️ Opportunities for foreign buyers therefore remain limited: clearly identifying your legal status is essential before any real estate steps in New Zealand!
Good to Know:
In New Zealand, foreigners can purchase real estate under certain strict conditions governed by the Overseas Investment Act of 2005. Non-residents must obtain approval from the Overseas Investment Office (OIO), especially for significant residential and land properties. Temporary residents can only purchase land to develop new constructions or commit to living on-site, while permanent residents do not have these restrictions. Possible exemptions include significant economic development projects or properties on small islands, but these cases remain rare. Administrative steps include submitting proof of fund provenance and intentions for property use. The types of accessible properties vary, ranging from vacant land to commercial buildings, but resale must often comply with specific local market conditions. In 2022, only 3% of real estate purchases were made by foreigners, highlighting the rarity of such investments in a primarily local market.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
