GST & RENTAL PROPERTIES NZ: WHAT’S EXEMPT AND WHAT ISN’T

GST and rental properties NZ landlords deal with come up in almost every property conversation we have. Long-term residential rent sits outside the GST system entirely. Short-stay accommodation, since April 2024, doesn’t. Mixing the two up is one of the most common — and most expensive — GST mistakes we see. This guide sets out exactly what’s exempt, what isn’t, and where the line actually sits.

30-Second Read

• Long-term residential rent is a GST-exempt supply. You can’t charge GST on the rent. You also can’t claim GST on expenses like maintenance, rates or insurance.
• Selling a residential rental property is also generally exempt. That’s if you’ve rented it out for at least 5 years beforehand as part of a taxable activity. (Don’t confuse this with Brightline tax)
• Short-stay accommodation is different. Since 1 April 2024, platforms like Airbnb and Bookabach must charge GST on bookings. That applies regardless of the host’s own registration status.
• Selling between two GST-registered parties for a taxable activity is typically zero-rated. No GST changes hands, but the transaction still gets reported.
• Getting the exempt-vs-taxable distinction wrong is one of the costliest GST errors landlords make. That’s especially true for a property used for both long-term and short-stay purposes.

We work through the exemption, the sale rules, and the input/output tax mechanics. We also cover how short-stay accommodation breaks from the general rule, plus two worked examples and a checklist.

 

 

Is There GST in a Residential Sale and Purchase Agreement?

We get asked this constantly: does a Sale and Purchase Agreement for a rental residential property include a GST component? Do you need to claim GST on purchases made for the property?

The answer to both is generally no. Long-term residential rental falls under a specific category: a “GST exempt supply”(opens in new tab) of services.

What Is an Exempt Supply?

An exempt supply is goods or services that GST simply doesn’t apply to. You don’t report them in your GST return at all. They sit outside the system entirely, rather than being taxed at 0%.

Residential rental accommodation gets this treatment for a specific reason. Parliament wanted renting and owning a home to sit on a similar footing, tax-wise. As a result:

• There’s no GST component in the Sale and Purchase Agreement for a long-term residential rental property.
• You can’t claim GST on purchases made for the property’s maintenance or improvement.
• You don’t charge GST on the rent itself.

IRD’s Core Rules

Inland Revenue’s guidelines on this are clear:

• GST can’t be charged on the rent for a residential dwelling(opens in new tab). A landlord can’t claim any GST on dwelling expenses, such as maintenance, rates and insurance.
• If a residential dwelling is sold as part of a taxable activity, and it was rented for at least 5 years beforehand, the sale is an exempt supply(opens in new tab).
• If a property developer acquires a property for the principal purpose of making a taxable supply, then subsequently rents it out, a change-of-use adjustment may be required.

That 5-year test matters. Sell a residential rental property sooner than that, as part of a taxable activity, and the exemption may not apply the same way. Check with your accountant before a sale if you’re anywhere near that threshold.

Input and Output Tax: Why GST Registration Status Matters

Buy a rental property from a GST-registered seller, and you’re GST-registered yourself? The sale is typically zero-rated. No GST changes hands: the seller charges none, and the buyer claims none. Both sides still need to report the transaction correctly, though.

Sell to a buyer who isn’t GST-registered, though, and GST (output tax) may become payable to IRD on the sale. This is exactly why confirming both parties’ GST registration status matters so much. Do it before a sale and purchase agreement gets signed. Getting it wrong after the fact is a far more expensive fix than confirming it upfront.

Short-Stay Accommodation: A Different Set of Rules Entirely

Everything above describes long-term residential rental — a standard tenancy. Short-stay accommodation, booked through a platform like Airbnb(opens in new tab), Bookabach(opens in new tab) or similar, doesn’t get the same GST-exempt treatment. We cover this in full in GST App Tax Rules NZ. Here’s the short version:

Since 1 April 2024, online marketplaces must charge and collect 15% GST on short-stay accommodation bookings. That applies regardless of whether the host is personally GST-registered. It’s a fundamentally different treatment from the long-term rental exemption described above. The platform, not the host, generally handles the GST charging and remittance.

This distinction matters most for landlords who run a property as long-term rental for part of the year, and short-stay accommodation for the rest. Each period needs the correct GST treatment applied. Long-term rental stays exempt. Short-stay bookings through a platform fall under the marketplace rules regardless of the property’s usual status.

Common Mistakes

Assuming all residential rental income is GST-exempt. True for long-term tenancies. Not true for short-stay accommodation booked through a platform since April 2024.

Not confirming the buyer’s GST status before selling. Selling to a non-GST-registered buyer, when you expected a zero-rated transaction, can create an unexpected liability.

Claiming GST on long-term rental expenses. If the rental is a GST-exempt residential tenancy, you can’t claim GST on maintenance, rates, or insurance for it.

Missing a change-of-use adjustment. A property developer who originally intended a taxable supply, but ends up renting the property out instead, may need to make an adjustment. Easy to miss if the original intention isn’t formally revisited.

Worked Examples

Let’s see how this functions in practice:

Mark sells a long-term rental he’s held for eight years. Mark’s property has been rented out continuously as a standard tenancy for eight years — well past the 5-year threshold. He sells as part of his ongoing property investment activity. He meets the rental-period test, so the sale is an exempt supply. No GST applies to the transaction either way.

Aroha runs one property as both a long-term rental and, later, an Airbnb. Aroha rents her property on a standard tenancy for the first two years. She then switches it to short-stay accommodation once the tenancy ends. For the long-term rental period, no GST applied to the rent, and she couldn’t claim GST on expenses. Once she lists on Airbnb, the platform starts charging GST on her bookings under the marketplace rules. That’s a completely different treatment from the exempt tenancy income she was receiving just months earlier.

Checklist

• ✅ Confirm whether your rental is long-term (GST-exempt) or short-stay accommodation (subject to marketplace GST rules)
• ✅ If selling, check whether you meet the 5-year rental test for the sale to qualify as exempt
• ✅ Confirm both parties’ GST registration status before signing a sale and purchase agreement
• ✅ Don’t claim GST on expenses for a property that’s a GST-exempt long-term rental
• ✅ If switching a property between long-term and short-stay use, apply the correct GST treatment to each period separately
• ✅ Check whether a change-of-use adjustment applies if the property’s original purpose has changed

Common Questions

Can I claim GST on repairs to my long-term rental? No. If the rental income itself is GST-exempt, you can’t claim GST on associated expenses, including repairs, maintenance, rates or insurance.

Do I need to register for GST because I own a rental property? Not because of long-term residential rental income alone. That’s exempt and doesn’t count toward the GST registration threshold. Short-stay accommodation income is treated differently — see our GST App Tax Rules article for the detail.

Will I pay GST when I sell my rental property? Generally no, if you’ve rented it out for at least 5 years as part of a taxable activity. Selling sooner, or in different circumstances, may change the answer — check with your accountant.

What if I run the same property as both a long-term rental and an Airbnb? Each period needs its own GST treatment. Long-term tenancy periods stay exempt. Short-stay bookings through a platform fall under the marketplace GST rules, regardless of what the property does the rest of the year.

Summary

GST and rental properties NZ landlords hold usually sit outside the GST system entirely. Long-term residential rent is exempt, and expenses on that rental can’t carry a GST claim. A sale after 5 years of rental use is typically exempt too. That changes the moment a property shifts into short-stay accommodation. The marketplace GST rules introduced in April 2024 apply there, regardless of the host’s own registration status. Getting the two treatments confused, especially on a property that does both across the year, is one of the more expensive GST mistakes a landlord can make. It’s also one of the easiest to avoid with the right advice upfront.

Talk to EpsomTax.com About Your GST Position

GST rules for rental property sit in a genuinely confusing spot — mostly exempt, except when they’re not. Getting it wrong can mean an unexpected GST bill, or a claim that shouldn’t have been made in the first place.

Contact EpsomTax.com to confirm the correct GST treatment for your rental property, whether you’re buying, selling, or switching between long-term and short-stay use. We work with New Zealand property investors every day, and can make sure your GST position is right before it becomes a problem.