Five things to know before you sign a Sale & Purchase Agreement
Buying property, whether it’s your first home, an investment, bare land, an orchard, agricultural or horticultural land or a commercial building is exciting. It can also move quickly. When a great opportunity appears, it’s tempting to sign and secure it.
Selling a property if you are not prepared in advance could be costly from a tax perspective too. Always seek advice from your professional advisors before you sign any Sale and Purchase Agreement.
Pause first.
At Bennetts Proactive, we regularly see how early advice can prevent unexpected tax bills, cashflow strain and unnecessary stress. Before signing any Sale & Purchase Agreement in New Zealand, here are five important things to consider.
1. The tax implications aren’t always obvious
Tax is often the hidden factor in a property deal. Depending on your intentions, how long you plan to hold the property and how it’s structured, you may be exposed to income tax on sale, bright-line rules, or GST, particularly with land or commercial property.
What looks simple today can create a tax cost later. Understanding your likely position before signing means no surprises down the track.
2. Ownership structure matters
Buying in your personal name, through a company, or through a trust can significantly affect tax treatment, asset protection and succession planning. It may also influence your borrowing capacity.
Changing ownership after settlement can be costly and complex. It’s far easier to get it right from the beginning.
3. Cashflow is more important than headline returns
A property can look strong on paper. But real-world cashflow is what counts.
Interest deductibility, maintenance, insurance, rates, lease terms and vacancy risk all impact your bottom line. We often help clients assess whether a purchase genuinely supports their wider financial goals… not just whether it looks good in a spreadsheet.
4. GST can catch buyers out
GST is one of the most common traps, especially in commercial transactions. Whether the property is zero-rated, sold as a going concern, or involves GST-registered parties can significantly affect the settlement amount.
These clauses in the agreement can have a major cashflow impact. Getting the agreement reviewed before signing is critical.
5. Start with the end in mind
Even if you plan to hold the property long term, circumstances change. Markets shift. Tax rules evolve.
Thinking about your eventual exit strategy at the start allows you to structure the purchase properly and avoid complications later.
Once a Sale and Purchase Agreement is signed, your flexibility reduces. By then, restructuring or tax minimisation options may be limited.
If you’re considering a property purchase or a property sale, talk to us before you sign. A short conversation now can save you significant cost later.
Got questions still?
Call Bennetts Proactive on 07 573 8446 or contact your usual advisor to discuss your next move.