What is the bright-line test in New Zealand?

The bright-line test is New Zealand's main rule for taxing residential property capital gains. If you sell a residential property within the bright-line period after acquiring it, any profit is taxable income unless an exclusion (main home, business premises, farmland) or rollover relief applies. For properties sold on or after 1 July 2024, the bright-line period is 2 years regardless of when you acquired the property. For earlier sales, the period depended on the acquisition date and was either 2, 5, or 10 years.

What was the bright-line period before 1 July 2024?

It depended on when you acquired the property. Properties acquired 1 October 2015 to 28 March 2018 had a 2-year test. Properties acquired 29 March 2018 to 26 March 2021 had a 5-year test. Properties acquired on or after 27 March 2021 had a 10-year test, with a 5-year carve-out for new builds. These periods still matter if you sold a property before 1 July 2024 and are filing a late return, amending, or being audited on a historical sale.

How does the main home exclusion work now?

For sales on or after 1 July 2024, the main home exclusion applies if you used the property as your main home for MORE than 50% of the bright-line period AND used more than 50% of the area as your main home. If either test fails, you don't qualify. A 12-month absence buffer is available (overseas trips, renovations). The exclusion cannot be used more than twice in any 2-year period, to prevent serial flipping. For sales before 1 July 2024 acquired after 27 March 2021, a similar 50/50 test applied. For sales acquired before 27 March 2021, an all-or-nothing majority-use test applied.

What counts as a new build for bright-line purposes?

A property qualifies as a new build if its Code Compliance Certificate (CCC) was issued on or after 27 March 2020. Under the old 10-year rule (for properties acquired 27 March 2021 to 30 June 2024), new builds had a shorter 5-year bright-line period. Under the current 2-year rule, the new build distinction is no longer relevant for bright-line purposes, but it still matters for interest deductibility (new builds had uninterrupted 100% deductibility throughout the phase-out period).

What is rollover relief?

Rollover relief allows certain transfers between related parties to happen without resetting the bright-line clock or triggering tax. For sales on or after 1 July 2024, rollover relief is available for transfers between associated persons (spouses, partners, parents and children, certain family trusts, look-through companies, partnerships). The transferee 'inherits' the transferor's acquisition date and cost base. Without rollover relief, a transfer to a trust or family member counts as a disposal at market value and can trigger the bright-line test even though no external sale occurred.

NZ Bright-Line Test Calculator (Comprehensive)

The bright-line test taxes gains on residential property sold within a set period after acquisition. The rules have changed three times (2018, 2021, 2024), and which rule applies to you depends on both the acquisition date and the sale date. This calculator handles all four acquisition bands, the main home and new build exclusions, rollover relief scenarios, and estimates the tax payable using current progressive brackets.

Updated April 2026 Current 2-year rule applies to all sales from 1 July 2024. Historical bands included for earlier sales.

Property dates

Acquisition date (settlement date when title transferred to you) Title transfer date. For off-the-plan purchases the rules are more complex. If you inherited, use the date of transfer to you (but inherited property may qualify for rollover relief). Sale date (contract / agreement date) This is the date of the sale and purchase agreement, NOT the settlement date.

Property details

Is this a "new build"? (CCC issued on or after 27 March 2020) New build status can shorten the bright-line period to 5 years under the 2021-2024 rules. Property type

Financials

Purchase price

Sale price

Selling costs (agent fees, legal, marketing)

Capital improvements during ownership

Genuine capital improvements (new deck, extensions, major renovations) are added to cost base. Maintenance and repairs are not.

Main home exclusion test

Was it used as your main home for MORE than 50% of the ownership period? Was MORE than 50% of the property area used as main home? Rollover relief (inherited / trust transfer / spousal)

Your income

Your other annual taxable income (for tax rate calculation)

Bright-line rule history

New Zealand's bright-line test has been amended four times since its introduction in 2015:

1 October 2015: Original 2-year rule introduced by National.
29 March 2018: Extended to 5 years by Labour.
27 March 2021: Extended to 10 years by Labour, with a 5-year carve-out for new builds.
1 July 2024: Reduced back to 2 years by National, applies to ALL properties regardless of when acquired.

Which rule applies to your sale?

The sale date (agreement date) determines which rule applies:

Sold on or after 1 July 2024: 2-year rule regardless of when you acquired.
Sold before 1 July 2024: The acquisition date determines which period applied - 2, 5, or 10 years.

This means someone who bought in June 2022 under the 10-year rule, and sells today, only needs to pass the 2-year test (which they have comfortably) to avoid bright-line. The change effectively shortened the exposure period for everyone with a single sweep.

Exclusions and rollover relief

Even if you're within the bright-line period, tax may not apply if:

Main home exclusion: You used the property as your main home (see calculator for specific test).
Inherited property: Qualifies for rollover relief - you inherit the deceased's acquisition date and cost base.
Rollover relief (from 1 July 2024): Extended to associated persons including spouses, partners, parents and children, certain family trusts.
Business premises: Commercial property is outside bright-line.
Farmland: Farmland (predominantly used for farming) is outside bright-line.

Other land sale rules still apply

Even if you pass the bright-line test, tax can still apply under other Income Tax Act provisions: purpose of resale (section CB 6), dealer rule (CB 7), builder rule (CB 9), subdivision (CB 12/13), or rezoning (CB 14). Use our Property Tax on Sale (All Triggers) Calculator to check all the other rules.

Sources

This tool is a starting point. Trust transfers, off-the-plan purchases, subdivisions, changes in co-ownership, and inherited property each have specific rules. If your situation is anywhere near the bright-line period, get tax advice before selling.

Related calculators

Property Tax on Sale (All Triggers) — other land sale rules beyond bright-line
Subdivision Tax Calculator
Rental Property Cash Flow Calculator
Interest Deductibility Calculator
KiwiSaver First Home Withdrawal Calculator

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