What is the Bright-Line Test?

The Bright-Line Test is a rule in New Zealand that determines whether you need to pay tax on the profit made from selling a residential property. It applies if you sell the property within a set number of years after buying it.

How long do you need to hold a property to avoid the Bright-Line Test?

To avoid the Bright-Line Test, you need to hold the property for more than 2 years. If you sell the property within 2 years of purchasing it, you may be taxed on the profit.

Are there any exemptions to the Bright-Line Test?

Yes, there are exemptions to the Bright-Line Test, including the sale of the family home, inherited property, and properties transferred as part of a relationship property settlement.

How is the profit from a property sale taxed under the Bright-Line Test?

If the Bright-Line Test applies, the profit from the sale is taxed at your marginal income tax rate, and you must include this in your annual tax return to the IRD.

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Use this calculator to find out if you need to pay tax under the Bright Line test and get an estimate of the amount you may owe

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