For many decades the backbone to a kiwi family’s retirement plan was to own a rental property or
properties. In some cases, the properties have been bought with no money down, having leveraged
again equity in their own homes. For the last decade or so, successive Governments have had
political pressure applied to make housing more affordable. The main tool used by all main political
parties has been to made rental property investment less attractive and encouraging investments in
other areas.
The test is a way of assessing whether tax is payable on any profit made on the sale of a residential
property in New Zealand.
The current Government has made changes to Brightline test which is to come into effect on 1 July
2024.
The Brightline Test for residential property, from 1 July 2024 will be reduced from 10 years to 2
years. This means that you only must pay tax on any profit made on a sale on properties owned for
less than 2 years unless an exception applies. This applies to all properties so properties with a 5- or
10-year Brightline period will be reduced to 2 years.
The exceptions to Brightline are main homes, separation/relationship property transfers, some
transfers to trusts, and receiving a property via an estate will remain in place.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose. We do not give
financial, taxation or investment advice and nothing in this article is intended as such.