Capital gains and losses: Key things to know
At a glance

It’s important to have a clear understanding of all the costs associated with retirement village living – and this includes capital gains and losses. Here are some key things to know.

In New Zealand, it’s rare for residents to receive any capital gains or bear any capital losses on the re-licensing of a property within a retirement village. The most common scenario is that capital gains and capital losses will be received or absorbed by the operator.

However, there are some situations where capital gains and losses might apply. Here is some more information:

  • Capital gains and losses are more common if you purchase a home on a unit title than when you purchase a licence to occupy. You may receive capital gains or be liable for capital losses on both the home and the land, or just the home, depending on the terms of the contract.
  • Some villages offer residents a portion of capital gains on the re-licencing of a licence to occupy. Village operators who offer this arrangement will have specific terms, which will be clearly outlined in your contract.
  • A capital loss clause means that if the operator sells the licence to occupy for less than you paid for it, you may be liable for the operator’s loss. It’s uncommon for village operators to include this clause, but it’s still present in some contracts.
  • You can find out a village operator’s terms and conditions relating to capital gains and losses by reviewing the village’s disclosure statement, which can be found by searching the name of the village on the Retirement Villages RegisterM.

Regardless of the legal title on which you purchase the home, if the contract states that you are entitled to either full or partial capital gains on resale (or liable for capital losses), then it’s extremely important to discuss all related terms with your lawyer.

Further reading:

  • Leaving the village: How does the sales process work?
  • Checklist: Important questions to ask village sales managers

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