Important Information for All Residential Land Owners
The “Bright Line Test” which previously imposed a tax on landowners who dispose of residential land within two years of purchase has been extended by Parliament.
The Third reading of the Taxation (Annual Rates for 2017 – 18, Employment and Matters) Bill has taken place. Revenue Minister Stuart Nash included the change in an amendment to Section FB 3A.
The Bright Line test has been extended from two to five years. This extension came into force on 29 March 2018.
Mr Nash says the extension of the Bright-Line test will help dampen property speculation and make homes more affordable.
Hey says it will also ensure that residential property speculators pay income tax on their gains, making property speculation less attractive.
Properties purchased before 29 March 2018 will still be subject to the two year bright-line test.
Any residential properties purchased after 29 March 2018 will be subject to tax if sold within five years of purchasing unless an exemption applies (such as the family home, or a transfer as part of an inheritance).
