New Zealand Bright-line Property Tax Checker

About the New Zealand Bright-line Property Tax Checker

Check whether selling a residential property is taxed under New Zealand’s bright-line test. Enter the date the title was registered to you and the date you signed the agreement to sell: for sales agreed on or after 1 July 2024, the profit is taxable when the two are within 2 years, unless the main home, business premises or farmland exclusion applies. Sales agreed before 1 July 2024, which used 2-, 5- or 10-year periods set by the date you bought, are covered too.

The checker shows the last day of your bright-line period, so you can see when an agreement to sell would fall outside it, and works out the profit after your costs and an estimate of the income tax on it with your other income for the year. Nothing you type leaves your browser.

The bright-line test

For residential property sold on or after 1 July 2024, the profit is taxable income if the bright-line end date is within 2 years of the bright-line start date, unless an exclusion or rollover relief applies (Inland Revenue). Your intention when you bought or sold does not matter, and the test also covers New Zealand tax residents selling residential property overseas (guide IR1229).

• The start date is usually the day the transfer to you is registered with Land Information New Zealand — normally your settlement date. For a purchase off the plan it is the day you entered into the agreement to buy.
• The end date is usually the day you enter into a binding sale and purchase agreement to sell — not settlement. Gifts, compulsory acquisitions and mortgagee sales have their own end dates (start and end dates).

Residential property includes land with a house on it, land the owner has an arrangement to build a house on, and land the owner can build a house on under the district plan rules.

Exclusions

• Main home: more than half of the land, including the yard, gardens and garage, was your main home for more than half of the bright-line period. A reasonable period building a new home — including design, usually until the code compliance certificate — is left out of the count. The exclusion cannot be used if you have already used it twice in the 2 years before the sale, or if you have a regular pattern of buying and selling or building and selling your main home (exclusions).
• Business premises: land used predominantly as business premises — but a business providing accommodation in a dwelling that is not your home is still residential.
• Farmland, and land that can be used as farmland.
• Inherited property: the test does not apply if you inherited the property or are the executor or administrator of a deceased estate.
• Rollover relief: for some transfers — under a relationship property agreement, between people associated for at least 2 years, or to a trust whose beneficiaries are all associated with you — you are treated as having bought the property when and for what the previous owner paid, and their use counts as yours (rollover relief).

Working out the profit and the tax

The profit is the sale price less the cost of the property: the purchase price, the costs of buying (lawyers, valuers, surveyors and real estate agents), capital improvements such as renovations, and the costs of selling. Holding costs — interest, rates and insurance — are deductible only when they are connected to earning income, such as rent, and are generally claimed in the year they are paid, so they are not part of this calculation.

The profit is income in the tax year the sale settles (usually), taxed with your other income at the individual rates — 10.5% to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000 and 39% above. The estimate here is the extra tax on your other income plus the profit. You report it in your return with a bright-line property sale information form, IR833 (Inland Revenue). A bright-line loss can only be offset against profits from other taxable land sales, in that year or later years.

Sales agreed before 1 July 2024

Earlier sales use the period set by the date you acquired the property — usually the date of the binding agreement to buy (property sold before 1 July 2024):

• acquired from 1 October 2015 to 28 March 2018: 2 years;
• acquired from 29 March 2018 to 26 March 2021: 5 years;
• acquired on or after 27 March 2021: 10 years, or 5 for a qualifying new build — so any such sale before 1 July 2024 was within the period.

For property acquired before 27 March 2021, the main home exclusion needs more than half the land as your main home for more than half the period. For property acquired on or after 27 March 2021 it needs the whole period, counting gaps of 12 months or less as main home days; otherwise the taxable profit is reduced in proportion to your main home use (guide IR1227).

Limitations

• For individuals. Companies, trusts, partnerships and look-through companies have extra rules — for example, a trust’s main home exclusion depends on its principal settlor.
• Special start and end dates (subdivided or partitioned land, gifts, mortgagee sales, perpetual leases) and rollover relief are not worked out: enter the dates Inland Revenue’s rules give you.
• Other land rules — buying with the purpose of selling, dealing, developing or building — can tax a sale outside the bright-line period; the checker does not test them.
• The tax is an estimate at the individual rates: tax credits, losses carried forward, holding costs and residential land withholding tax are not included.
• For an earlier sale of a property with two dwellings, where you lived in both the larger and the smaller one during the period, the apportionment needs the full IR833 formula.

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