Why does my property have an Encumbrance registered on its Record of Title obliging me to pay Infrastructure Payments to Milldale Infrastructure?
Milldale Infrastructure provided financing to Fulton Hogan Land Development for five Bulk Housing Infrastructure projects required to facilitate the Milldale Development. These infrastructure projects include the development of vital roading and water infrastructure that benefits all residents of the Milldale Development.
The Infrastructure Payments payable by the properties in the Milldale Development repay that financing over time.
How do I pay my Infrastructure Payment?
Your Infrastructure Payment will be included as a line item on your general Auckland Council rates invoice. You need to pay your Infrastructure Payments at the same time as when you pay Auckland Council general rates and in accordance with the instructions on the Auckland Council invoice.
How does it affect my ability to obtain a mortgage over a property?
The major residential lenders are aware of the Encumbrance model and have been provided with background information on how it is intended to co-exist with mortgages. While each lending decision is one to be made by those lenders, the Encumbrance model has been established to allow a mortgage to be registered against the Record of Title without the need for any consent from Milldale Infrastructure. The Encumbrance must retain its first ranking priority.
How do I check the remaining amount of Infrastructure Payments on a property?
The Encumbrance registered on your property’s Record of Title contains a schedule of all the Infrastructure Payments payable by year. If you have any remaining questions then you can email them to us at email@example.com.
I am buying a property in Milldale but am not the first home owner, how do I confirm the remaining amount of Infrastructure Payments on the property?
The Encumbrance registered on the property’s Record of Title contains a schedule of all the Infrastructure Payments payable by year.
As part of a standard sale and purchase process of a property that is subject to an Encumbrance, payments made in respect of the quarterly payment period in which settlement of the sale occurs will be apportioned between the vendor and the purchaser in the same manner as Auckland Council rates are apportioned.
Do I need to pay the Infrastructure Payments for my property?
Yes. If you own a property that has an Encumbrance registered on the property’s Record of Title then you are legally obliged to pay the Infrastructure Payments. The Infrastructure Payments you are obliged to pay will be included as a line item in the general Auckland Council rates invoices for your property.
What happens if I fail to pay the Infrastructure Payments when they are due?
We (either through Auckland Council or directly) will contact you to remind you of your obligation to pay the overdue Infrastructure Payments as set out in the Auckland Council rates invoice and in the Encumbrance, we may charge late payment fees on the same basis as Auckland Council charges late payment fees for overdue general rates. If you continue to fail to pay the overdue Infrastructure Payments we may take legal action to recover the overdue amounts and associated costs. The Encumbrance includes a power of sale which means that we may sell your property to recover unpaid Infrastructure Payments in the event of persistent non-payment.
Can I prepay or accelerate payments of Infrastructure Payments?
Are Infrastructure Payments tax deductible?
If you own the land for private use, then Infrastructure Payments are not tax deductible.
If you own the land for non-private use (e.g. a rental property, or to carry on a business), Inland Revenue has issued a specific product ruling which confirms that the Infrastructure Payments are tax deductible. You should review this ruling to make sure that it applies to your situation. See here:
Inland Revenue has also issued a ‘determination’ which taxpayers have the option of using to prescribe the timing of when a tax deduction might be available (this is on a payments basis, with an adjustment for any amount paid or received under the sale and purchase agreement). See here:
If you use the property partially for private use and partially for non-private use, you should obtain tax advice on how to calculate an appropriate apportionment for tax purposes.
Are Infrastructure Payments GST inclusive?
Inland Revenue’s specific product ruling (see here) confirms that the Infrastructure Payments (including any lump sum prepayment) are not subject to GST (i.e. they are ‘exempt’). No taxpayer can claim any GST on an Infrastructure Payment.
The specific product ruling also confirms that where a property is sold and is subject to GST, there should not be any GST implications arising from the Encumbrance being part of the sale of the property (if that sale is subject to GST) – i.e. the encumbrance transfers at nil consideration. Similarly, where there is an adjustment for any accrued or prepaid Infrastructure Payment on the sale of a property, that adjustment should not be subject to GST.