Inheritance and estate taxes in New Zealand: what applies and what does not
New Zealand has no inheritance tax, estate tax or death duty. Estate duty ended for deaths on or after 17 December 1992 under the Estate Duty Abolition Act 1993, and gift duty ended for gifts on or after 1 October 2011. Beneficiaries do not pay tax simply for receiving an inheritance of money or property. Income earned afterwards, such as rent or interest, is taxable, and some benefits are tested on what you hold.
The rest of this page covers what is still taxed around a death, how the Work and Income and rest-home subsidy tests treat an inheritance, and what to check on a sale. It is general information, not tax or legal advice. If you are arranging a funeral or settling an estate now, the practical steps are in our when someone dies guides.
Why New Zealand has no inheritance tax
Estate duty, a tax on the value of an estate at death, was repealed in 1992. Inland Revenue says gift duty was kept for a time and then repealed because it no longer raised significant revenue, with the change taking effect for gifts made on or after 1 October 2011 (Inland Revenue: Gifting). Neither tax exists today, and we are not aware of any plan to bring either back.
Do you pay tax on money you inherit in NZ?
No. Receiving an inheritance, whether cash, shares or property, is not itself a taxable event. Inland Revenue puts it this way: "Generally, you do not pay tax when you inherit property" (Inland Revenue: Inheriting property). What can be taxed is what the asset earns once it is yours, such as bank interest, dividends or rent, which go on your own return in the usual way.
What is still taxed around a death
| Situation | Taxed? |
|---|---|
| Receiving an inheritance (cash, shares, property) | No inheritance tax |
| Gifting assets before death | No gift duty for gifts on or after 1 October 2011 |
| The deceased's income up to the date of death | Yes, on a final return |
| Estate income while the estate is being wound up | Yes, an estate return; 33% for the year of death and the next three tax years, then taxed as a trust |
| Trust income not paid out to beneficiaries | Yes; 33% if the trust earns $10,000 or less in a year and 39% if it earns more, from 1 April 2024 |
| Income the inherited asset earns after you own it | Yes, on your own return |
| A later sale of inherited property | Depends on the asset and the owner's purpose, see below |
| A lump sum paid on death under an employer-provided term life policy | Not taxable income of the employee or their estate (Inland Revenue QB 18/03); ask a tax adviser about other policy structures |
Sources: Inland Revenue: Trustee tax rates and Inland Revenue: Looking after the affairs of someone who has died, retrieved 20 October 2026.
What returns does an executor file?
The executor files a final income tax return for the person who died and estate returns for income the estate earns afterwards. For income received in the first 28 days after death, the executor decides whether it goes on the final return or the estate return. Inland Revenue needs written proof that you can act, such as a letter of administration or a copy of the will or probate, and says processing can take around 10 weeks. Student loans are written off at death, and any KiwiSaver funds Inland Revenue holds go to the estate. The executor's wider tasks are in executor of a will in NZ, and the order of work in deceased estate assets.
Does an inheritance affect Work and Income payments?
An inheritance is not taxed, but it can change what you are paid, because several payments are income or asset tested. These are the published figures we could confirm on 20 October 2026:
| Payment | What Work and Income says |
|---|---|
| Accommodation Supplement | Cash asset limit of $8,100 for a single person and $16,200 for a couple or sole parent; the page does not mention inheritances or define cash assets (Work and Income, updated 24 July 2026) |
| Supported Living Payment | Depends on your and your partner's income; the page does not mention an asset test or inheritances (Work and Income, updated 24 July 2026) |
| Residential Care Subsidy (age 65 and over) | Total assets of $300,811 or less for a single person, with the home and car counted; income from a trust or estate counts as income (Work and Income, updated 4 August 2026) |
Our reading, not Work and Income's, is that a cash inheritance sitting in a bank account could take you over the Accommodation Supplement cash asset limit, so the safest step is to ask Work and Income before the money arrives. For the rest-home subsidy, gifting rules also matter: up to $8,500 a year of gifts in the last five years is not counted, with older gifts of up to $27,000 a year not counted, and sales below fair value are checked. The detail is in our family trust guide. Our guide on life insurance payouts and benefits covers the insurance side.
Selling an inherited house
New Zealand has no general capital gains tax, but the bright-line test can tax a profit on residential property sold within a set period. Inland Revenue says a transfer of residential property on death to an executor or administrator, and the later sale by the estate or by the beneficiary, are not taxable under the bright-line test. The test does not usually apply when you sell an inherited residential property (Inland Revenue: Transfers of deceased estate and inherited property).
Three cautions from Inland Revenue's pages:
- Buying out another beneficiary. If you buy another beneficiary's share, you may pay tax on that share if you sell within the bright-line period.
- The previous owner's purpose. Whether you pay tax on a later sale depends partly on why the deceased held the property. Inland Revenue's example is land bought to subdivide and sell, where the heir who sells can be taxed.
- A transfer to a family trust. From 1 April 2022, rollover relief applies when a beneficiary transfers inherited residential property to a qualifying family trust. See family trusts in NZ.
Property that was a rental or a business asset can raise separate tax questions. Get tax advice before selling, and before agreeing to buy out a sibling's share.
Inheriting from overseas
New Zealand does not tax you for receiving an inheritance from overseas. The country the person lived in, or where the assets sit, may apply its own estate or inheritance tax before anything reaches you, and moving or selling foreign assets afterwards can have New Zealand tax consequences. We have not confirmed Inland Revenue's treatment of overseas pensions or foreign shares, so we do not state it here. Ask an accountant who handles cross-border estates.
Life insurance and the estate
Inland Revenue's QB 18/03 says lump sum claims paid on death under a term life policy taken out by an employer for an employee are not taxable income of the employee or their estate. We have not confirmed Inland Revenue's position for other policy structures, so ask a tax adviser if the payout is large or the arrangement is unusual. Whether a payout is part of the estate depends on who the policy pays. Proceeds are estate property only if payable to the estate, and who is paid otherwise depends on who owns the policy and the insurer's terms. The old statutory protections for a spouse and children under the Life Insurance Act 1908 were repealed on 1 April 1986. For the practical detail, see who gets your life insurance payout and using life insurance to leave an inheritance.
Planning when there is no inheritance tax
With no inheritance tax to minimise, the planning is about process and protection. A current will decides who inherits; probate is the court step when it is needed; the trustee of a will runs any ongoing trust; and the order of who benefits without a will is set out in dying without a will.
If a lump sum for your family is part of the plan, two Momentum Life products ask no health questions. Quick Life accepts ages 18 to 65 and excludes pre-existing conditions and suicide for the first 2 years. Funeral Insurance accepts New Zealanders aged 40 to 75 and pays only for accidental death in the first 24 months. Total funeral premiums can exceed the benefit, and the benefit may not cover a whole funeral. Neither takes new applicants over 75, and fully underwritten cover through an adviser can offer more for less if you are healthy. Momentum Life Limited is rated B (Fair) by A.M. Best; see its financial strength page.
QuoteHub is a Momentum Life partner and Smiths Insurance & KiwiSaver may receive a commission if you buy a Momentum policy; see how we are paid. Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name.
Adviser's view
The gap people fall into is not inheritance tax, because New Zealand has none. It is assuming that no inheritance tax means no tax and no consequences. An estate still files tax returns, inherited assets earn taxable income, a few sales are caught, and a cash inheritance can change what Work and Income or the Residential Care Subsidy will pay.
Compare your cover with a licensed NZ adviser · free, no obligation.
Cite this page QuoteHub NZ (2026). Inheritance Tax NZ: Why There Is No Death Duty. www.quotehub.co.nz/guides/estate/inheritance-tax-nz. Updated 2026-10-20.
References
- Estate Duty Abolition Act 1993
- Inland Revenue: Gifting
- Inland Revenue: Inheriting property
- Inland Revenue: Transfers of deceased estate and inherited property
- Inland Revenue: Trustee tax rates
- Inland Revenue: I'm looking after the affairs of someone who has died
- Inland Revenue: Questions We've Been Asked QB 18/03 (employer-provided term life policies)
- Work and Income: Accommodation Supplement
- Work and Income: Supported Living Payment
- Work and Income: Residential Care Subsidy
Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, What You Get.