The Brightline test is a tax regulation that applies to residential property sales. From 1 July 2024, the bright-line property rule will be reduced from ten years to two years. This means a property sold after this date will only be impacted by the bright-line tax if it is sold within a two year period. It is important to note that this new rule only applies to agreements that are entered into after 1 July 2024. It is the agreement date not the transfer date that is important here.

In addition to this change there are changes to the main home exemption and new rollover relief for when property is sold to an associated person. Inland Revenue has a lot of helpful information and examples on its website to help you understand the Brightline test better. This will enable you to make smart choices about your property and know what to expect when it comes to taxes. Always consult a tax advisor for personalised advice prior to selling a property.

Changes to the bright-line property rule (ird.govt.nz)