Plans to change the 2-year bright line test to 5 year bright line test

Labour’s election promises included extending the 2-year bright line rule to 5-year bright line rule.

The new Bright-Line Test will take effect as soon as it is enacted in Parliament. It is likely to apply prospectively, meaning it will apply for purchases from this year onwards. Previous purchases will likely fallu nder the 2-year rule. What we may see is an increased investor interest bringing forward their purchases before April 2018.

If you are still not familiar with the bright line rule, read this post.

Briefly, the gains made on any residential property purchased  after October 1, 2015 and is soldwithin 2 years of acquisition, will be subject to income tax.  It does not matter what the intention of the investor was (whether they were speculating or genuinely investing).

back to home (Property Guide 360 .co.nz)