Property speculation is in the spotlight again
The Bright-Line test used to determine tax payable on gains from residential property sales is about to change. The amendment seeks to extend the time frame from 2 years to 5 years so if you sell a property within 5 years of purchasing it, you are likely to incur tax payable on the gain. This change, initiated by the revenue minister, is designed to dampen property speculation and thereby make homes more affordable.
Current exemptions from the bright line test will remain. This includes the exemption for the main home of owner-occupiers of residential property.
The extension to the bright-line test will only apply to residential investment property agreements entered into AFTER the the bill is enacted, which is expected in March. The passage of the bill will also enable the Tax Working Group to factor the change into any consideration of a comprehensive capital gains tax.