Bright-line property rule is now law

The bright-line rule Government proposed as part of Budget 2015 has just passed into law. This rule will apply to residential property bought on or after 1 October 2015.

What's changing?

The new bright-line rule requires people who sell residential property within two years of buying it to pay income tax on the sale, unless:

• it's their main home
• they inherited the property
• they receive a property as a part of a relationship settlement.

All existing property tax rules, for example the intention test, still apply. The bright-line rule only applies to residential property. Business premises and farmland are not subject to this rule.

New information requirements

When buying, selling or transferring New Zealand property, excluding your main home, you'll provide your:

• IRD number
• taxpayer identification number (TIN) from any overseas countries where you have to pay tax on your worldwide income, if you have one.

You'll give your property lawyer or conveyancer this information. You may choose to do this by filling in a Land Transfer Tax Statement, which is available on the Land Information New Zealand (LINZ) website.