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Do you know about the Bright-line Property Rule?


Bright-line Property Rule - In 2015 the Government introduced the bright-line test. This requires income tax to be paid on gains from the sale of residential property under certain circumstances. If the property is not your main home and you sell it after 27 March 2021, the sale will attract capital gains tax if:


• the property was acquired on or after 27 March 2021 and sold within 10 years;


• the property was acquired between 29 March 2018 and 26 March 2021 and sold within 5 years; or


• the property was acquired between 1 October 2015 and 28 March 2018 and sold within 2 years.



The bright-line test does not apply if the property was:


• your main home (and you have not sold twice during a two-year period);


• transferred as part of an inheritance; or


• transferred to you as an executor/administrator of a deceased estate.



Government has indicated that new builds will continue to be subject to a 5 year bright-line period. Before this can be legislated, what is considered a 'new build’ is still to be consulted on.



We recommend that before buying or selling a property that you obtain advice on any bright line issues before signing any agreement. For more information on this or any other legal issues you can contact Kemp Barristers & Solicitors at info@kempsolicitors.co.nz or 412-6000.

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