Skip to main content

Budget 2024 | The Government has confirmed changes and provided more information on FamilyBoost. Find out more: FamilyBoost

Budget 2024 | The Government has confirmed changes to personal income tax, the independent earner tax credit, in-work tax credit, and the minimum family tax credit. Find out more: Personal income tax threshold changes

If you sell a residential property within a set period of time after acquiring it, you may have to pay income tax on any gain on the sale, unless an exclusion or rollover relief applies. This also applies to New Zealand tax residents who sell overseas residential properties. 

Go to the ‘Property tax decision tool’ at the bottom of this page to work out if the property you are selling is taxable under any of the property rules, including the bright-line property rule.

The bright-line periods

The bright-line property rule looks at whether the property was acquired:

  • on or after 27 March 2021 and sold within 5 years for qualifying new builds or within 10 years for all other properties
  • between 29 March 2018 and 26 March 2021 and sold within 5 years

Changes are coming

For properties sold on or after 1 July 2024, the bright-line property rule will only apply if the property is sold within 2 years of acquiring it.

When a property is acquired

For tax purposes, a property is generally acquired on the date a binding sale and purchase agreement is entered into (even if some standard conditions like getting finance or a building report still need to be met). Full information on when a property is acquired is found in 'QB 17/02' on our Tax technical website.

The date you acquire property determines which bright-line period applies - whether it is for 2, 5 or 10 years.

This will also determine which set of rules relating to the main home exclusion will apply to your property.

Bright-line period start and end dates

The bright-line period generally starts from the date you bought the property which is the date the property’s title is transferred to you (generally the settlement date) and ends when you enter into a binding sale and purchase agreement to sell the property. For properties acquired off the plan, different rules apply.

Property acquired on or after 27 March 2021 is treated as having been acquired before 27 March 2021, if the purchase was the result of an offer the purchaser made on or before 23 March 2021 and that offer could not be withdrawn before 27 March 2021. This means that the 5-year bright-line period applies.

QB 17/02 Income tax - date of acquisition of land, and start date for 2-year bright-line test

Selling residential property after the bright-line period ends

The bright-line property rule does not apply if you sell a property outside the applicable bright-line period. But other property sale rules will still apply when you:

  • bought the property and you had an intention to sell it
  • you have a pattern of buying and selling or building and selling your main home
  • or a person you’re associated with are in the business of property dealing, developing or building and the property was bought for the business.

Situations where the bright-line property rule does not apply

Generally, the bright-line property rule does not apply to a sale of property that has been your main home.

Different criteria apply to qualify for a main home exclusion depending if the property was acquired before, or on or after 27 March 2021.

Business premises and farmland are also excluded. 

Full or partial relief is available for certain types of ownership transfers. 

The bright-line property rule does not apply if you’re the executor or administrator of a deceased estate or you inherited the property.

Inheriting property

Property affected by a North Island adverse weather event and purchased by a Crown or local authority is not taxable under the bright-line property rule.

January and February 2023 weather events

Residential land withholding tax (RLWT)

If you're an offshore RLWT person and have a sale subject to the bright-line property rule, a withholding tax will be deducted at the time of the sale unless a valid certificate of exemption is held.

The residential land withholding tax (RLWT) should be deducted at the time of sale by your conveyancer.

Residential land withholding tax (RLWT)

Bright-line residential property sale information form - IR833

Complete this if you had a bright-line property sale during the year and show the income from the sale in your income tax return.

7 minutes
Property tax decision tool

Use this decision tool to help you work out if the property you're buying and selling is taxable under any of the property rules.

Go to this tool

Was this page helpful?

What did you like about this page?

Please tell us how we could improve this page?

Thanks for sharing your opinion! Your feedback has been received.

Sorry there was an issue submitting your feedback, please try again later.

Last updated: 01 Apr 2024
Jump back to the top of the page