Important Update on Bright-line Test
This is an important update for anyone who owns a property and is possibly looking to sell a property. Please contact us if you are thinking of selling and BEFORE you sell as your income tax may be affected depending on when the property was purchased or ownership was transferred.
This is a complex area that is catching a lot of people out and we are doing everything we can to ensure our clients are clear on how the sale of their property will impact their tax obligations so you can make a well-informed decision.
Please contact us to book a meeting or get further advice on this before you consider selling a property.
Update From IRD
The Minister of Finance, Hon Grant Robertson, has announced proposed changes for residential property acquired on or after 27 March 2021. The proposed changes include:
- extending the bright-line test to 10 years
- amending the main home exclusion which would require tax to be paid on gains made for periods the property is not used as the owner’s main home
- allowing newly built homes to use a 5 year bright-line test
- not allowing property owners to claim interest on loans used for residential properties as an expense against their income from those properties. This would start from 1 October 2021, and would also be phased in over 4 years for existing properties. There would be an exemption for newly built homes.
For early guidance on how the changes may affect homeowners, download the factsheets from our Tax Policy website at taxpolicy.ird.govt.nz
Fact Sheets to Download: