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

For property acquired on or after 27 March 2021 and sold before 1 July 2024, you can claim the main home exclusion for any period or periods the property is actually used as your main home.

You can claim the main home exclusion in full if you:

  • used more than 50% of the property’s area as your main home (including the yard, gardens, and garage), and
  • lived in the property as your main home for 100% of the bright-line period. This may include any period of up to 12 months where it was not used as your main home (for example, a period between moving out and when the property is finally sold).

Non-main home days within 12-month period

If the property has not been used as your main home for any period of 12 months or less during the bright-line period, these days are still treated as main home days.

For example, if you take a few months to move into a property, or you own it for a few months after moving out, those days are treated as main home days and the main home exclusion continues to apply for those months.

You can have more than one of these periods treated as main home days as long as they are not back-to-back with each other.

Reducing the amount of tax to pay based on actual usage

Even if you don’t qualify for the full main home exclusion, apportionment rules mean you are eligible for a reduction in the amount of tax you need to pay. The reduction is based on how much of the property you used as your main home and for how long.

Area of land usage

If you use less than half of the land as your main home, you must pay tax on any profit relating to the non-main home portion of the land.

Non-main home days for a period 12 months or more

If there are 12 months or more when the property was not used as your main home during the bright-line period, the main home exclusion will not apply to that period(s). You may have to pay tax on the portion of any profit from the sale relating to that time.

For example, an owner sells a property 3 years (36 months) after the start of the bright-line period and during those 3 years they had moved out and rented it for 15 months, while they worked and lived overseas. Any profit will be split between the 15 months and the remaining 21 months during the bright-line period. Tax will be payable on the amount of profit from the sale apportioned to the 15-month period.

A person who is constructing a building may qualify for the main home exclusion even if the construction takes longer than 12 months as long as the time period is reasonable.

Qualifying non-main home days for a period 12 months or more

You may qualify for the main home exclusion even if you do not live in the property for more than 12 months if you:

  • built a new home and the construction period was reasonable, and you lived in the property
  • needed to vacate the property for a reasonable period to repair damages from a North Island flooding event.

Residential land withholding tax (RLWT)

If you're an offshore RLWT person and have a sale subject to the bright-line test, the withholder will need to deduct RLWT at the time of the sale unless a valid certificate of exemption is held.

You can apply for a certificate of exemption only if the property is eligible for the main home exclusion in full.

Certificate of exemption from RLWT

For more information about the main home exclusion and examples, read Part 2 of the Bright-line property tax – IR1227 guide.


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Last updated: 21 Jun 2024
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