Revenue Minister Stuart Nash says the bright-line test on residential property sales will be extended from two years to five years by amendments to the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill.
Mr Nash says he will introduce a Supplementary Order Paper to give effect to the changes, which were outlined before the election.
“The extension of the previous government’s bright-line test will help dampen property speculation and make homes more affordable,” Mr Nash says.
“The previous government required income tax to be paid on any gains from residential property sold within two years of acquisition, with some exceptions.
“The extension means that profits from residential investment properties which are bought and sold within five years will generally be taxable."
He says the extension to the bright-line test will apply to residential investment properties purchased from the date on which the bill receives the Royal Assent - which is expected in March 2018.