The bright-line rule was updated again on 27 March 2021. This greatly affects those buying and selling residential properties (including residential bare land) in New Zealand. A brief summary of the main changes are as follow:
- Extension of the bright-line period to 10 years for properties acquired on or after 27 March 2021 except for new builds which are subject to bright-line period of 5 years
- New builds include properties with Code Compliance Certificates (CCC) issued on or after 27 March 2020
- New change-of-use rule so that main home exclusion is no longer on an all-or-nothing basis (a 12-month buffer applies) for properties acquired on or after 27 March 2021
- Interest deductibility is no longer applicable for rental properties acquired on or after 27 March 2021 effective from 1 October 2021 (excluding new builds and property development activities). For properties acquired before 27 March 2021, deductions for existing loans will be phased out over 4 years.
Other existing property sale rules, residential land withholding tax (RLWT) criteria for offshore RLWT persons, exemptions and reliefs continue to apply.
Now more than ever, people buying and selling residential properties need to carefully consider and be kept up-to-date with all the different rules in this constantly changing environment. Avoid making a costly mistake and talk to one of our friendly team members who will be ready to assist you.