Property sold before 1 July 2024

The bright-line test works differently for property sold before 1 July 2024. The date you acquired the property decides which bright-line period to use (5 or 10 years) and which main home exclusion criteria to use.

When a property is acquired

For tax purposes, a property is generally acquired on the date a binding sale and purchase agreement is entered into (even if some standard conditions like getting finance or a building report still need to be met).

Bright-line periods

The bright-line test looks at whether the property was acquired:

• on or after 27 March 2021 and sold within 5 years for qualifying new builds or within 10 years for all other properties
• between 29 March 2018 and 26 March 2021 and sold within 5 years.

The changes to the bright-line test starting on 1 July 2024 means you no longer have to separate out new builds from all other properties. Your property sale will only come under the bright-line test if you acquired the property on or after 29 March 2018 and you are selling it within 5 years or before 1 July 2024 (whichever comes first).

Bright-line start and end dates

For a standard purchase of property, the bright-line period starts from the date the property’s title is transferred to you, generally the settlement date.

For a standard sale, the bright-line period ends when you enter into a binding sale and purchase agreement to sell the property.

Different rules apply for other types of purchase, for example off the plan, and for other types of sale or disposal, for example when property is gifted.

Main home exclusion

The bright-line test does not tax the sale of a property that has been your main home.

Different criteria apply to your main home depending if you acquired it before, or on or after 27 March 2021.

Ownership transfers and rollover relief

From 1 April 2022 until 30 June 2024, the following changes in legal ownership qualify for rollover relief:

• transfers to or from look-through companies and partnerships
• certain transfers to or from qualifying family trusts
• transfers within tax consolidated groups of wholly-owned companies.

Whether full rollover relief, no tax to pay, or partial rollover relief, some tax to pay, applies to these new categories depends on whether payment is made for the transfer and if so, how much.

Full rollover relief applies if the amount you receive for the transfer is equal to or less than the previous owner’s (transferor’s) acquisition cost.

Partial rollover relief applies if the amount you receive for the transfer is more than the previous owner’s acquisition cost. Some tax may need to be paid on the transaction, but the amount of tax may be limited.

Transfers of Māori residential land to or from trusts

From 1 April 2022, rollover relief applies to certain transfers of land subject to Te Ture Whenua Māori Act 1993 and transfers as part of settling Te Tiriti o Waitangi - Treaty of Waitangi claims.

Transfers of Māori residential land to or from trusts

No relief for transfers from parents to children

Rollover relief does not extend to parents helping their children own their first home. If parents are co-owners and later sell their share to their children, the bright-line test applies.