Buying guide
Brightline test explained
Everything you need to know about New Zealand’s capital gains tax
AI summary
The brightline test taxes profits from selling residential property within a two-year period, effective July 1, 2024. This profit is taxed at your marginal income tax rate.
Key exemptions include:
- Your main family home
- Inherited property
- Relationship property settlements
However, the IRD can still tax gains if a pattern of property trading is identified. The tax applies to net profit after deducting costs like purchase price and agent fees. Professional tax advice is highly recommended.
What is the brightline test?
Why the NZ brightline tax was introduced
The family home is usually not covered by the brightline, unless it's been rented out.
Exceptions to the brightline test
Your main home
Inherited real estate
Relationship property
Your capital gains may be taxed if:
You’re in a pattern of buying and selling property for profit
You’re a builder or property developer
You’ve rented out your main home
The bigger the gain, the higher the tax.
You’ve sold the property to an entity
How to work out how much you’ll be taxed
Get expert advice from a tax accountant
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