Bright-line property changes - What are they and who do they affect?

Bright-line property changes - What are they and who do they affect?

Let's start with what is the Bright-line property rule.

The bright-line property rule in New Zealand is a tax law that requires you to pay income tax on any profits made from selling a residential property within a certain timeframe after purchasing it if it is not your family home.

Effective from 1st July 2024 the bright-line property rules change. Bright-line testing will only apply to properties sold on or after 1st July 2024 if the property is sold within two years of acquiring it. This will apply to both new builds and all other properties. Keep in mind that other property sale rules will still apply such as whether you have a pattern of buying and selling your main home.

Consider using the Inland Revenue’s property tax tool if you’re unsure whether you’ll need to pay tax on the sale of property: https://www.ird.govt.nz/property/buying-and-selling.

"The bright-line property rule does not apply if you sell a property outside the applicable bright-line period. But other property sale rules will still apply when you:

> Bought the property and you had the intention to sell it.
> You have a pattern of buying and selling or building and selling your main home.
> You or a person you’re associated with are in the business of property dealing, developing, or building.

The bright-line property rule does not apply to the sale of property that has been your main home.

> Different criteria apply to qualify for a main home exclusion depending if the property was acquired before, or on, or after 27th March 2021.
> Business premises and farmland are also excluded.
> Full or partial relief is available for certain types of ownership transfers.
> The bright-line property rule does not apply if you’re the executor or administrator of a deceased estate or you inherited the property."

Click here for more information around buying and selling. 

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