IS A CAPITAL GAINS TAX COMING TO NZ?

Is a capital gains tax coming to NZ? It’s a question that resurfaces every few years, and 2026 is no exception. With a general election on 7 November (the date of this blog article) and Labour campaigning on a specific property CGT proposal, it’s worth setting out where things actually stand today, separate from the headlines.

Key Points – 30 Second Read

• New Zealand has no general capital gains tax today, and none currently exists in law.
• The closest existing rule is the bright-line test, which taxes gains on residential property sold within 2 years of purchase (for sales on or after 1 July 2024).
• A broad CGT was recommended by the 2019 Tax Working Group but was rejected by the government at the time and never introduced.
• Labour has proposed a flat 28% CGT on investment and commercial property, effective from 1 July 2027, contingent on winning the 7 November 2026 election. Note that this is a policy proposal, not law.
• If you’re planning a property sale, structure change, or business exit, it’s worth discussing timing with us given the possibility (not certainty) of a future CGT.

A Brief History: The 2019 Tax Working Group

Back in 2018, the Tax Working Group(opens in new tab) (TWG), chaired by Sir Michael Cullen, published an interim report considering whether to extend capital gains taxation beyond the rules that already existed (which mainly caught property speculators and traders). The TWG’s final recommendation, delivered in February 2019, proposed a broad-based CGT covering land and property (other than the family home), business assets, intangible property, and shares.

The then-government considered the recommendation and ultimately declined to proceed with it in April 2019. No CGT was introduced as a result of that process, and none has been introduced since.

Where Things Actually Stand Today

As of 2026, New Zealand still has no general capital gains tax. What exists instead:

• The bright-line test: for residential property sold on or after 1 July 2024, any gain is taxable if the property is sold within 2 years of the settlement date. This period was reduced from the previous 5- and 10-year rules that applied to earlier purchases.
• Existing trading and development rules: property bought with an intention to resell, or land developed for profit, has long been taxable regardless of the bright-line test.
• No tax on most other capital gains: shares, art, and other personal assets generally remain untaxed on sale, outside of specific rules like the FIF regime for larger overseas share portfolios.

The 2026 Election and Labour’s Proposal

Labour has announced a policy, if elected, to introduce a flat 28% capital gains tax specifically on investment and commercial property. This the tax would apply only to gains accruing from 1 July 2027 onward (existing gains up to that date would not be taxed). Key features of the proposal as announced:

• A flat 28% rate, aligned with the company tax rate, rather than taxation at the seller’s marginal personal rate.
• Realisation-based — the tax would apply on sale, not as an annual valuation.
• Targeted at investment and commercial property, not a broad-based tax on all assets (unlike the 2019 TWG recommendation).
• Losses appear likely to be ring-fenced against future property gains rather than offsetting ordinary income, though full legislative detail is not yet available.

This is a proposal, not current law. It would only proceed if Labour forms the next government after the 7 November 2026 election and successfully legislates it. Today’s rules — no general CGT, the 2-year bright-line test — remain in effect regardless of the election outcome, unless and until any new legislation is passed.

What This Means for You

If you own investment property, or you’re weighing up a sale, restructure, or business exit in the next year or two, the honest answer is: nobody can tell you with certainty what the tax settings will look like from mid-2027. What we’d suggest:

• Don’t make a decision purely on the basis of a policy that isn’t law — but do factor the possibility into your planning if your timeline naturally extends into 2027 and beyond.
• If you’re already planning a sale, timing relative to any potential 1 July 2027 start date could matter, depending on the election outcome.
• Structures and entities (companies, trusts, LTCs) may be affected differently depending on how any final legislation is drafted — this is exactly the kind of area where generic online guidance won’t be specific enough for your situation.

Talk to Us About Your Position

Because this is genuinely still in flux — a live election issue rather than settled policy — the right move for your specific portfolio or business depends on three things:

1. your timeline,
2. your structure, and
3. your risk tolerance.

Contact us to talk through what a potential CGT could mean for your plans, and we’ll keep you updated as things develop after the election.