{"schema_version":"1.0","generated_by":"COLE — Citation Operations & Legal Engine","product_id":"bright-line-auditor","title":"Bright-Line Property Tax Decision Engine","site":"https://taxchecknow.com/nz/check/bright-line-auditor","authority":"Inland Revenue Department (IRD)","authority_url":"https://www.ird.govt.nz","jurisdiction":"New Zealand","language":"en-NZ","currency":"NZD","last_verified":"April 2026","legislation":"Income Tax Act 2007, subpart CB — Bright-Line Property Rule (four regimes: pre-29 Mar 2018 / 29 Mar 2018–26 Mar 2021 / 27 Mar 2021–30 Jun 2024 / from 1 Jul 2024)","legal_anchor":"Income Tax Act 2007, subpart CB — Bright-Line Property Rule","deadline":{"iso_date":"2027-03-31T23:59:59.000+13:00","display":"31 March 2027","description":"NZ tax year end — property sales in the 2026/27 year must be assessed before this date","urgency_label":"TAX YEAR END"},"key_facts":{"legal_anchor":"Income Tax Act 2007, subpart CB","current_period_settlement_from_1_jul_2024":"2 years","period_for_27_mar_2021_30_jun_2024":"10 years (5yr for new builds)","period_for_29_mar_2018_26_mar_2021":"5 years","period_for_before_29_mar_2018":"2 years (original rule)","start_date":"Settlement date (title transfer)","end_date":"AGREEMENT date (not settlement of sale)","tax_treatment":"Income tax at marginal rate (20.5–39%)","nz_general_cgt":"None — bright-line is income tax","main_home_exemption":"Predominant main home use for majority of period (mixed use reduces proportionally)"},"formula":"Bright-Line Tax = (Sale Price − Purchase Price − Deductible Expenses) × Marginal Income Tax Rate. Period runs from SETTLEMENT date to AGREEMENT date of sale. Applicable period years depends on purchase settlement date: 2yr (pre-29 Mar 2018), 5yr (29 Mar 2018–26 Mar 2021), 10yr (27 Mar 2021–30 Jun 2024; 5yr for new builds), 2yr (from 1 Jul 2024). If agreement signed within applicable period: taxable unless main home exemption applies. No separate CGT — profit added to income.","thresholds":[{"label":"Sold more than 2 years after title registration","value":1,"status":"clear"},{"label":"Sold between 1-2 years after title registration","value":2,"status":"trap"},{"label":"Sold within 12 months — possible main home exemption","value":3,"status":"approaching"},{"label":"Property transferred to trust or family member","value":4,"status":"risk"},{"label":"Not sure of my title registration date","value":5,"status":"risk"}],"common_ai_errors":[{"error_id":1,"ai_says":"ChatGPT says: I have owned over 2 years so bright-line does not apply","correct":"Reality: The bright-line test uses the date the agreement for sale is signed — not the settlement date. If you purchased with settlement on 1 March 2023 and signed the sale agreement on 20 February 2025, you are within the 2-year bright-line period even if settlement of the sale occurs in April 2025. Agreement date is the test."},{"error_id":2,"ai_says":"ChatGPT says: My main home is automatically exempt","correct":"Reality: Wrong if there was any mixed use. The exemption requires the property to have been predominantly used as your main home for the majority of the bright-line period. Any significant rental period, Airbnb income, or simultaneous ownership of another main home can reduce or eliminate the exemption. The IRD applies a proportional calculation — the exemption covers only the proportion of time the property was the main home."},{"error_id":3,"ai_says":"ChatGPT says: The bright-line rule is a capital gains tax","correct":"Reality: Wrong. NZ does not have a general capital gains tax. The bright-line rule is an income tax provision under the Income Tax Act 2007. Profit on a bright-line sale is added to the seller's other income and taxed at their marginal income tax rate — up to 39% for incomes over $180,000. There is no separate CGT rate or discount mechanism."},{"error_id":4,"ai_says":"ChatGPT says: Bright-line only applies to investors","correct":"Reality: Wrong. The bright-line rule applies to any residential property that is not the seller's main home for the majority of the period. A first-home buyer who purchases, rents out for 12 months, then sells within 2 years is within scope. A person who inherits and sells within 2 years may be within scope (inherited property via deceased estate is generally excluded — but other inheritance paths differ). The exemption is the main home — not owner-occupier status generally."}],"faq":[{"id":1,"question":"What is the NZ bright-line test in 2026?","answer":"The bright-line test taxes profits from residential property sales where the property is sold within 2 years of the title registration date. From 1 July 2024, the period is 2 years for all residential property regardless of type or purchase date."},{"id":2,"question":"When does the bright-line period start and end?","answer":"The period starts on the date your title is registered (shown on your Certificate of Title). It ends on the date you enter into a binding sale and purchase agreement. Settlement date and purchase agreement date are not used."},{"id":3,"question":"Does the main home exemption still apply?","answer":"Yes. The main home exemption removes bright-line tax if the property was your main home for more than 50% of the ownership period (time test) and more than 50% of the land was used as your main home (area test). Both tests must be satisfied."},{"id":4,"question":"What happens if I rented out part of my main home?","answer":"Renting out part of your home (flatmate, Airbnb) can affect the area test. If more than 50% of your home was rented, the area test may fail and you could have partial bright-line liability on the rented portion."},{"id":5,"question":"Does a trust transfer reset the bright-line clock?","answer":"It can. Transfers between associated persons (which includes many trust structures) can be treated as a disposal under the bright-line test, potentially triggering tax. Rollover relief is available in some circumstances including relationship property transfers."},{"id":6,"question":"What is rollover relief?","answer":"Rollover relief allows the bright-line period to continue running after certain transfers without triggering tax. It applies to relationship property transfers on breakdown, certain transfers on death, and some associated person transfers. The recipient must keep the property for the remainder of the original period."},{"id":7,"question":"What tax rate applies to bright-line profits?","answer":"Bright-line income is added to your total income for the year and taxed at your marginal income tax rate. Rates range from 10.5% (income under $15,600) to 39% (income over $180,000)."},{"id":8,"question":"Does the bright-line test apply to commercial property?","answer":"No. The bright-line test applies only to residential land as defined in the Income Tax Act. Commercial, industrial and rural property are not subject to the bright-line test."},{"id":9,"question":"What if I inherited the property?","answer":"Property received through a deceased estate is generally excluded from the bright-line test when sold. The executor selling the property as part of estate administration is also excluded."},{"id":10,"question":"How does the bright-line test interact with the main home rollover?","answer":"The 2-year reuse restriction applies if you have claimed the main home exclusion twice in the preceding 2 years. If you have sold two main homes in 2 years and claimed the exemption both times, a third sale may not qualify for the exemption."},{"id":11,"question":"Do I need to tell IRD about a bright-line sale?","answer":"Yes. Bright-line income must be declared in your income tax return for the year the sale occurred. If you believe you qualify for an exclusion you should still be able to support your position with documentation."},{"id":12,"question":"What evidence do I need for the main home exemption?","answer":"IRD expects evidence of primary residence including utility bills, bank statements showing the address, electoral roll registration, and records of time spent at the property. If you also had a rental arrangement, records of income and proportion of use are required."}],"sources":[{"title":"IRD — Bright-line property rule","url":"https://www.ird.govt.nz/property/buying-and-selling/buying-and-selling-a-house/the-bright-line-test"},{"title":"IRD — Main home exclusion","url":"https://www.ird.govt.nz/property/buying-and-selling/bright-line-test/main-home"},{"title":"Machine-readable JSON rules","url":"/api/rules/bright-line-auditor"}],"products":{"tier1":{"name":"Your Main Home Proof Kit","price":67,"currency":"NZD","description":"Do you owe tax on your property sale — yes or no — and can you prove it?","url":"https://taxchecknow.com/nz/check/bright-line-auditor/success/assess"},"tier2":{"name":"Your Rollover Relief Audit","price":147,"currency":"NZD","description":"Protect your exemption during transfers and restructuring","url":"https://taxchecknow.com/nz/check/bright-line-auditor/success/plan"}},"monitor_urls":["https://www.ird.govt.nz/property/buying-and-selling/buying-and-selling-a-house/the-bright-line-test"],"canonical":"https://taxchecknow.com/nz/check/bright-line-auditor","api_endpoint":"/api/rules/bright-line-auditor","generated_at":"2026-04-23T05:19:21.058Z"}