The purpose of this article is to compare the real estate investment environments in Australia and New Zealand and highlight some of the differences which apply, particularly in connection with taxation laws and Government charges on property transactions.

A significant advantage in the New Zealand property market is the absence of a capital gains tax (CGT). In Australia, although the family home is exempt from CGT, investment properties are not and this tax can take a large bite out of the sale proceeds from an investment housing asset. There is a concession in that CGT is levied at 50% of the net proceeds provided the asset has been held for more than 12 months. 

Of course, nothing lasts forever and New Zealand is one of the few developed countries without a CGT. The introduction of some form of CGT in New Zealand has been raised from time to time. 

New Zealand property investors are also advantaged by higher allowable rates of depreciation on buildings. The New Zealand allowance is 4% compared with 2.5% in Australia. In New Zealand, the book value of a property is updated by a valuer at the time of the sale/purchase transaction, while the Australian process involves the written-down asset value for depreciation purposes being transferred with changes in ownership. 

Both countries enjoy the freedom from death duties or other estate taxes. 

Stamp duty is a significant tax applied to Australian property transfers and investment property loans but there is no similar tax in New Zealand. 

On the face of it, there are some significant advantages associated with property investment in New Zealand compared with Australia, mainly in the taxation arena. 

The other important considerations are market trends, the potential for capital growth and rental yields. Australia experiences more dynamic population growth, although there is no lack of demand in many locations in New Zealand and increasing property speculation. Both countries rate highly on the "affordable" rankings, with Australia a little worse.

My Knowledge Tips

1. On the face of it, there are some significant advantages associated with property investment in New Zealand compared with Australia, mainly in the taxation arena.
2. New Zealand property investors are advantaged by higher allowable rates of depreciation on buildings.
3. The other important considerations are market trends, the potential for capital growth and rental yields.
4.   New Zealand is one of the few developed countries without a capital Gains Tax (CGT). The introduction of some form of CGT in New Zealand has been raised from time to time.