Property Speaking, Autumn 2024, No 45
The new government has brought in significant changes to the property sector; we outline what these could mean for you.
Bright-line test changes
Under the current framework, the bright-line rules affect properties that were acquired on or after 27 March 2021 and sold within five years for qualifying new builds or within 10 years for all other properties. The bright-line period starts on the date that the transfer took place and ends on the date which you enter into a binding agreement for sale and purchase to sell your property (this is slightly different if you purchased your property off the plans).
There are exclusions where the bright-line rules do not apply such as:
- For the period which the property has been your main home
- If the sale of your property is subject to other tax rules, and
- Where your property is farmland or business premises.
As of 1 July 2024, the bright-line period will be reduced from 10 years (or five years for new builds) to two years. While the new rules have not yet come into effect, the government has announced that properties sold after 1 July 2024 will only be subject to the bright-line rules if they are sold within two years from when your property was purchased.
There are still some details that have not yet been confirmed relating to the bright-line changes such as:
- Whether the bright-line rules are triggered by the transfer of property in and out of trust ownership
- What date the bright-line period is calculated on, and
- The ‘main home’ exemption.
