Te hoko mai, te hoko atu rānei i te whare matua Buying or selling a main home

A main home  is the property where you live for most of the time, or if you have more than 1 property it is the one that you have the greatest connection to.

Generally, any profit you make on the sale of your main home is taxable when you:

• have a regular pattern of buying and selling, or building and selling, your main home
• or a person you’re associated with is in the business of property dealing, developing or building and the property was part of the business
• sell it within the applicable bright-line period and the main home exclusion does not apply
• have used the main home exclusion twice or more over the 2-year period immediately before you sold your main home.

The main home exclusion when you sell a property

Your main home will be excluded from the bright-line property rule if:

• more than 50% of the property’s area is used as your main home (this includes the yard, gardens and garages), and
• it was used as your main home for the time required during the applicable bright-line period.

The bright-line period starts on the date you bought the property which is generally the date the property's title is registered with Land Information New Zealand (LINZ) (generally the settlement date) and generally ends when you enter into a binding sale and purchase agreement to sell the property.

The main home exclusion applies differently depending on when the property was acquired. In most cases the date you acquire it is when the sale and purchase agreement to buy it became binding.

Property acquired before 27 March 2021

If you acquired your property before 27 March 2021 and sold it within the applicable 2 or 5 year bright-line period, and it was used as your main home for more than 50% of the time during the bright-line period, you’re covered by the main home exclusion.

Having the intention to use the property as your main home is not enough. You must actually have lived there.

You cannot use the main home exclusion if you used:

• less than half of the land as your main home, or
• your main home for less than 50% of the time during the bright-line period.

Property acquired on or after 27 March 2021

If you acquired your property on or after 27 March 2021 and sold it within the:

• 5-year bright-line period for new builds, or
• 10-year bright-line period for all other properties

and it was used as your main home for 100% of the time during the bright-line period, you are generally covered by the main home exclusion.

If the property has not been used as your main home for a continuous period or periods of 12 months or less during the bright-line period, you do not need to count the period(s) as a change-of-use – the days in the period are 'treated as' days the property was used as your main home.

If for any continuous period or periods of more than 12 months it was not used as your main home, then you may have to pay tax on a portion of any profit from the sale.

If you use less than half of the land as your main home, you can still use the main home exclusion but you are required to pay tax on any profit relating to the non-main home portion of the land.

The main home exclusion can also apply if you’re a:

• trustee of a trust and one of the trust's beneficiaries lives in the property
• property dealer, developer or builder or an associated person.

Residential properties held in trust

Residential properties held in trust can apply the bright-line main home exclusion if the house sold was the main home of a beneficiary of the trust and one of the following conditions applies:

• the principal settlor does not have a main home
• it is the main home of the principal settlor of the trust that is being sold.

The principal settlor is the person who has made the biggest financial contribution to the trust, ie their settlements to the trust have been greatest by market value.

If you're unsure how the rules apply to your situation, talk to your tax advisor.