Understand the property rules

When you sell

The bright-line test could affect you if you're planning to sell a residential property.

When you sell a residential property (including overseas residential properties), your profit is taxable if you sell it within a set amount of time (the bright-line period). The bright-line period applies unless there is an exclusion or rollover relief.

Generally, the bright-line test does not apply to a sale of property that has been your main home when your use meets certain criteria. Business premises and farmland are also excluded.

What the bright-line test means for you

For property sold:

• on or after 1 July 2024, the bright-line test looks at whether your bright-line end date for the property is within 2 years of your bright-line start date.
• before 1 July 2024, different timeframes apply.

Start and end dates

When you rent out property

If you have a rental property that is not used privately at all, you can deduct expenses from the rental income you include in your tax return.

Interest limitation rules limit the ability to claim interest as an expense and apply to:

• property with a dwelling on it (like a house or apartment)
• bare land that can be used for residential property.

The interest limitation rules apply to you if:

• you rent out the property long-term
• you use it for short-stay accommodation
• you leave it vacant.

For interest to be deductible, it must not be private in nature and the general deductibility rules must be met.