Property - Changes to the Bright-Line Test
Revenue Minister Stuart Nash has confirmed the bright-line test on residential property sales will be extended from two years to five years. Previously, income tax must be paid on any gains from residential property sold within two years of acquisition, with some exceptions (such as the family home). The extension means that profits from residential investment properties bought and sold within five years will generally be taxable.
Changes in the law have been made and as of March 29th 2018, they have come into effect. People now who sell a house in New Zealand within five years of buying it must pay income tax on any gains, unless it's their main home or another exception applies.
If you would like more information on this law change, don't hesitate to get in touch. Meanwhile, if you are in the process of entering into sale and purchase agreements to acquire property, please give priority to discussing the tax implications with us.