Transferring land in excess of 4,500m2 - (Nov 98) (WITHDRAWN)

Introduction

This standard practice statement sets out the practices of the Christchurch Duties Unit when land being transferred is in excess of 4,500 m2 and has a house on it, or a house will be built on the land.

Effective date

This standard practice statement takes effect immediately.

Legislation

Section 24(2)(b) of the Stamp and Cheque Duties Act 1971 gives the Commissioner of Inland Revenue the authority to exempt from duty land that is in excess of 4,500m2, in certain circumstances.

The exemption from duty is for so much of the area of land as is reasonably appropriate for residential purposes, having regard to the size and character of the dwelling house. Dwelling house is defined in Section 2 as

... a building, or part of a building, that is a house, flat, townhouse, home unit, or similar dwelling erected primarily and principally as a residence, and includes any land improvements, or appurtenances, belonging to the dwelling house or usually enjoyed with it ...

The legislation will be applied using the following procedure.

Procedures

To claim an exemption you should:

1. Make application on an IR 673 form "Residential home purchase exemption". This form is a prescribed form.
2. Provide a valuation of the "dwelling house", signed by a registered valuer, the licensee of a real estate firm, or two arm's length parties when they contractually agree. This is to establish the value of the exempt area.
3. Provide a reasoned argument if a total exemption is being sought. Evidence is required to support this argument.
4. Your request will be considered and if accepted the documents will be noted accordingly.
5. If the request is not accepted the disputes resolution process will be initiated.

Example 1

'A' purchased a bare block of land in Kamo. The area of land was 2 hectares. The land is relatively flat in character and has been purchased as a "lifestyle" block. ' A ' intends to erect a kitset dwelling within the next six months. " A " may run a few sheep to keep the grass down.

An application has been received to exempt the total area.

The Commissioner would not exempt the total area in this case. There is no evidence to suggest that the extended area should form part of the "dwelling house" A "lifestyle" block does not meet. the definition of "dwelling house". However, a 2ha property with extensive gardens, swimming pool, or steep hill boundaries, could meet the requirements. Plans, maps and photographs can also be used.

Example 2

' B ' purchased a steep property in the Marlborough Sounds. The lower boundary is a vertical drop into Queen Charlotte Sound. There is also a covenant noted on the title restricting the clearing of native bush. The area of land is 1 hectare. An abstract has been received with a transfer and agreement, but without an IR 673.

The documents will be returned asking for an IR 673. The IR 673 is a prescribed form, which is required to be completed before consideration can be given to an application.

Example 3

Same as Example 2, but an IR 673 was received.

Using the above example the application would be approved. The character of the land, the convenant and the steep drop would render most of the land unsuitable for any other land use.

Tony Bouzaid
National Manager
Operations Policy
November 1998