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IRD NEWS - Bright-Line property rule is now law

November 26, 2015

The bright-line rule Government proposed as part of Budget 2015 has just passed into law. This rule will apply to residential property bought on or after 1 October 2015.

What’s changing?

The new bright-line rule requires people who sell residential property within two years of buying it to pay income tax on the sale, unless:

it’s their main home

they inherited the property

they receive a property as a part of a relationship settlement.

All existing property tax rules, for example the intention test, still apply. The bright-line rule only applies to residential property. Business premises and farmland are not subject to this rule.

How people will return property income

In addition to your tax return containing ‘property income’ you will now also complete an IR833 Property Sale Information form. This form will be submitted along with your income tax return.

IRD webpage

IRD have created a webpage for people who buy, sell or transfer property. It covers all property changes that apply from 1 October 2015, including the new bright-line rule. www.ird.govt.nz/propertychanges

If you are unsure how this change will affect you please contact us.

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