COSTS WHEN SELLING AN APARTMENT
Selling an apartment, whether in Auckland or any other New Zealand city, is a different real estate process to selling a house and requires the skills of an apartment specialist to ensure you are protected.
There are many issues to consider, from selling a leaky apartment to understanding unit titles, and accessing the relevant real estate expertise for critical advice on valuations, tax, building inspections and finding real estate agents who are adequately experienced in selling an apartment.
All these things need to be carefully managed because following rules around apartment sale disclosure and understanding the complexities of tax could make a huge difference to the outcome.
Selling your Auckland apartment? Find a real estate agent with apartment expertise.
APARTMENT SELLING COSTS TO BUDGET FOR
Besides real estate commission and fees, there are other costs you should budget for:
- Body Corporates may charge for information needed for disclosure statements.
- There may be lost rent if an apartment needs to be empty during the sale process.
- If the apartment is tenanted, you could offer your tenants a reduced rent for the real estate sale period to encourage their co-operation.
- Taxes will be incurred in some instances (see more below).
- Property Lawyer fees for the conveyancing process
- Home staging (reputed to add value to the sale price.)
- Repairs and maintenance that ensure everything meets compliance obligations and adds value.
- If any defects are uncovered by the LIM or building report, you can either fix or disclose. It is often easier to deal with a problem before a house goes on to the market.
Worried about your leaky apartment? Find out about selling a leaky apartment
TAX ON INVESTORS SELLING APARTMENTS
Zero rated apartments
Many people buy apartments with a lease to a management company included in the purchase.
This often comes with a guaranteed rental arrangement. These apartments are often also sold as "going concerns.”
This type of apartment comes with conditions. You need to know what these are to avoid an unexpected GST bill when you sell your apartment.
IRD recommends talking with a tax professional before you make a decision about selling your investment apartment or changing its use.
If you sell your zero-rated apartment with the original management agreement in place to a GST-registered buyer your apartment might still be a going concern. In this case you probably don't have to pay GST on the sale.
You may have to pay GST if you sell your apartment and:
- the original agreement has expired, and you haven't negotiated another lease with the management company, or
- you change the way it’s used, eg, you or a member of your family moved into the apartment or you rent it yourself to tenants.
Bright-line test for property investors
If you purchase any residential property and sell it within five years (two years for properties purchased on or after October 1, 2015 through to March 28, 2018) or 10 years for properties bought after March 27, 2021, the sale may be taxable.
Find out more about capital gains tax
GET HELP TO SELL YOUR APARTMENT
The process of selling an apartment successfully, regardless of its pristine or poor condition, starts with your preparation and most importantly, your choice of real estate agent and legal advice because you are almost wholly reliant on what they advise you.
Request a shortlist of apartment specialists now – it’s a free service
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Article updated March 6, 2023 by Trish Willis | Member of Property Institute of NZ (IPAC)
