The “Bright Line” Test for property sales is now the law
November 19, 2015
The law received Royal assent on 16 November 2015 and applies to property bought on or after 1 October 2015. To review, the law requires sellers of residential property to record as income and pay tax on the net profits on sale if that property was acquired within two years of sale. Exceptions to this are
- Residential property that is their main home
- Residential property was inherited
- Residential property received as part of a relationship settlement
Business premises and farmland are not part of this law. Most other rules and laws about property remain unchanged. For instance if the residential property was acquired with the intention to sell, then selling it after the two year period will not prevent the profits from being taxed.
IRD has set up a website for more information on changes made at www.ird.govt.nz/propertychanges (available to access at the date of this entry). But as there are potentially some less than straight-forward rules regarding dates of acquisition and sale and other changes if you’re unsure, you are welcome to contact us to discuss consequences and pitfalls, BEFORE entering into commitments and contracts.
Contact us today for your no-obligation consultation.