Brightline Period Extended to Five Years
As indicated in a recent article, The Brightline Test, the Government has announced the Brightline test period on residential property sales will be extended from two to five years. The objective in doing so is to ensure that speculators pay tax on gains from property speculation whilst at the same time improving housing affordability for owner occupiers.
Revenue Minister, Stewart Nash, has announced the change will be made by adding an amendment to taxation legislation currently making its way through Parliament. The passage of the bill will enable the recently formed Tax Working Group to factor the changes into any consideration of a comprehensive capital gains tax.
- The proposed five year period will have the same features that the present two year period has. The period will run from the date of settlement of a purchase to the date a person enters a new agreement to sell the property.
- The Brightline test continues to apply only to residential land, which includes land planned to be used for residential purposes. It does not include business premises or farmland.
- The Minister noted that the extension to the Brightline test will apply to residential investment properties purchased from the date on which the legislative amendment receives Royal ascent, expected to be March.
We remind our clients that the Brightline rules are complex and urge you to obtain tax advice relevant to your particular circumstances before undertaking any property investment.
The above information is of a general nature only. You should contact our firm for advice relating to your specific circumstance.
About Mark Bond
Mark is a member of our Property Team. He assists clients with various residential and commercial property transactions, including associated company and trust structuring.