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Buying or selling property? Make sure you know about the bright-line rule

What is the bright-line property rule?

The bright-line property rule means that people who sell a residential property might need to pay income tax on any gains.

How it works depends on when you bought the property.

If you purchased the property before 1 October 2015, the bright-line property rule does not apply.

If you purchased the property between 1 October 2015 and 28 March 2018, the bright-line property rule may apply if you sell it within two years of buying.

If the property is your family/main home, you inherited the property, or if you're the executor or administrator of a deceased estate, the bright-line rule does not apply.

If you purchased the property on or after 29 March 2018, the bright-line property rule may apply if you sell it within five years of buying.

If the property is your family/main home, you inherited the property, or if you're the executor or administrator of a deceased estate, the bright-line rule does not apply.

Exclusions

There are three exclusions:

  • if it's your family/main home
  • if you inherited the property
  • if you're the executor or administrator of a deceased estate

The bright-line rule does not replace existing property tax rules. You might still need to pay tax on your property profits even if the bright-line rule does not apply.

My obligations

If you sell a property that falls under the bright-line rule, then you'll need to complete an income tax return and a Property sale information form - IR833 at the end of the tax year. If you have a tax agent, they'll be able to help.

Learn more about how to file an income tax return