Will your sale trigger income tax?
Find out instantly whether your property sale falls within the bright-line period and could be subject to income tax.
What is the bright-line test?
The bright-line test is a rule that taxes profit from selling residential property if you sell within a set number of years of purchase. It applies regardless of your intention when you bought the property.
The period has changed several times: properties purchased from 1 July 2024 are subject to a 2-year bright-line period. Properties purchased between 27 March 2021 and 30 June 2024 are subject to a 10-year period (5 years for new builds). Earlier purchases have shorter periods.
If your sale falls within the bright-line period, any profit is treated as taxable income and taxed at your marginal rate. The main home exclusion may apply in some circumstances — see below.
Check your property
What about the main home exclusion?
If the property has been your main home for most of the time you owned it, you may be able to exclude the sale from the bright-line test. However, the rules around what counts as a "main home" are strict, and you can only use this exclusion twice in any two-year period.
Mixed-use situations (e.g. you lived there for part of the ownership period) require an apportionment calculation. We recommend speaking with a tax adviser if this applies to you.
Want to know your full exit costs?
The Exit Tax Estimator calculates bright-line tax, depreciation recovery, and your estimated net proceeds — all in one place.
Estimate exit costs →Source: Inland Revenue — IRD bright-line test guidance (opens in new tab)