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If you receive a property as part of a relationship settlement agreement, you will not pay tax on the property when it's transferred to you.

If you sell the property within the applicable bright-line period of the date it was first transferred to you in the former relationship you will pay income tax on any profit you make unless it is your main home.

If you transfer a share in your main home to a new partner and you both, as joint owners, sell the property within the applicable bright-line period, the bright-line property rule will apply and your partner will have to pay tax on the profit of their share if the property is not your partner’s main home.

The bright-line property rule

Example: Sam gives Bobby a half-share in his main home

When Sam and his partner Jenny split up in 2014 their rental property was transferred to Sam as part of the relationship property settlement.

On 7 November 2018 Sam decided to transfer a half-share in the property to his new partner Bobby. Bobby has another home that is her main home. On 7 May 2019 they decided to sell the property.

Because Bobby had owned her share of the property for only 1 year which is less than the bright-line period, and it was not her main home, she will have to pay income tax on her share of the profit from the sale.

As the property was Sam’s main home he does not need to pay tax as the main home exclusion applies to his share.

Last updated: 28 Apr 2021
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