What is the current bright-line period in New Zealand?

From 1 July 2024, the bright-line period for residential property is 2 years. If you sell within 2 years of acquiring the property, any gain is treated as taxable income unless an exemption applies. Properties acquired before 1 July 2024 may be subject to longer 5-year or 10-year rules that applied at the time of purchase.

Is my main home exempt from the bright-line test?

Yes, the main home exemption applies if the property has been used predominantly as your main home for the entire bright-line period (or more than 50% of the period, under the updated 2024 rules). Only one property can be your main home at a time.

How is the bright-line start date calculated?

The bright-line clock typically starts on the date the transfer of title is registered with Land Information New Zealand (LINZ), not the date you signed the sale and purchase agreement. The end date is the date you enter a binding sale and purchase agreement to sell, not settlement.

What about inherited property and the bright-line test?

Property acquired as an inheritance is generally exempt from the bright-line test, even if sold within the bright-line period. The exemption covers both the executor's sale during estate administration and beneficiaries selling after distribution.

Does rollover relief apply to transfers between spouses?

Yes. Transfers of residential property between spouses, civil union partners, or de facto partners as part of a relationship property settlement generally qualify for rollover relief — the bright-line clock keeps running from the original acquisition date rather than restarting.

I'm selling a property I bought before July 2024. Which bright-line period applies?

The period that applied when you acquired the property. Properties acquired 27 March 2021 – 30 June 2024 were subject to a 10-year rule (5 years for qualifying new builds). Properties acquired 29 March 2018 – 26 March 2021 were subject to a 5-year rule. However, the 2024 amendments allow those properties to sell on or after 1 July 2024 under the new 2-year period.

Bright-Line Test Calculator NZ: The 2026 Rules Explained

The bright-line test is New Zealand's closest thing to a capital gains tax on residential property — but it's confused more Kiwi homeowners than almost any other tax rule. The coalition government reverted it to 2 years from 1 July 2024, which means thousands of people who were stuck under 5 or 10-year rules are now free to sell. If that's you, here's what you need to know — plus a free bright-line calculator to check your situation in 30 seconds.

What is the bright-line test?

The bright-line test is a tax rule that treats the gain on sale of a residential property as taxable income if you sell it within a defined period after acquiring it. There's no separate "capital gains tax" in NZ — the bright-line test uses the normal income tax rates (10.5% to 39%) applied to your marginal bracket.

Current period (from 1 July 2024): 2 years.

How to calculate the bright-line start and end dates

This is where most people trip up.

Start date: the date the title transfer is registered with LINZ, not the date of the sale and purchase agreement you signed when buying
End date: the date you enter into a binding sale and purchase agreement to sell, not the settlement date

So if you registered title on 15 March 2024 and want to sell without the bright-line test applying, you'd need to wait until you can sign a binding sale agreement on or after 15 March 2026.

Bright-line test exemptions

Even within the 2-year period, several exemptions can put you outside the bright-line net:

1. Main home exemption

If the property has been your main home for more than 50% of the bright-line period (under the post-July-2024 rules), the gain is not taxable. Only one property can be your main home at any point in time. If you own multiple properties, you need to nominate which is your main home — and the exemption only applies to the one that's genuinely your primary residence.

2. Inherited property

Property inherited from a deceased estate is generally exempt, whether sold by the executor during administration or by a beneficiary after distribution.

3. Relationship property transfers (rollover relief)

If a property transfers between spouses, civil union partners, or de facto partners as part of relationship property division, the bright-line clock doesn't restart. The receiving partner "inherits" the original start date.

4. Rollover relief for trusts and close family

Certain transfers into and out of family trusts and to close family members can qualify for rollover relief, meaning the clock doesn't reset. These rules are narrow — get professional advice before relying on them.

5. New build exemption (historic)

Properties that qualified as "new builds" under the 5-year rule (acquired 27 March 2021 – 30 June 2024) continue to get special treatment. Most are now well outside any bright-line period anyway.

Do I pay tax on the full sale price?

No — the bright-line test taxes the gain, not the sale price. That's calculated as:

Gain = Sale price − (Purchase price + allowable costs)

Allowable costs include:

Legal fees on purchase and sale
Agent commission on sale
Capital improvements (but not general maintenance)
GST (if applicable)

That gain is added to your other income for the year and taxed at your marginal rate. On a NZ$80,000 gain for someone on the 33% tax bracket, that's NZ$26,400 of tax.

Worked example

Priya bought a Tauranga townhouse for NZ$620,000 in August 2023, registering title on 5 September 2023. She moved in, then moved cities for work 14 months later and rented the property out. She now wants to sell it for NZ$715,000 in October 2026 — 37 months after registration, so outside the 2-year bright-line period. No bright-line tax applies.

Had Priya instead sold in June 2025 — 21 months after registration — she'd be inside the bright-line period. But because the property was her main home for the first 14 months (more than 50% of the period), the main home exemption would protect her.

What changed in July 2024?

The short version: the coalition government cut the bright-line period back from 10 years (or 5 years for new builds) to a flat 2 years for all residential property, effective for any disposal on or after 1 July 2024. The policy reason: to reduce friction for property owners whose circumstances change (job relocation, family reasons) and who would otherwise hold property purely to avoid a tax trigger.

The change didn't retroactively rewrite the clock for properties still mid-period — it just means the effective bright-line period is now whichever is shorter, 2 years from acquisition or the original rule that applied at purchase.

Try the calculator

Our free bright-line calculator takes your purchase date, sale date, and whether the main home exemption applies, and tells you immediately whether the sale is taxable and what the indicative tax liability looks like.

→ Try the bright-line test calculator

Important: this calculator is an estimate. IRD's rules have nuances around title transfer dates, new builds, and rollover relief that may affect your specific situation. Always confirm with your accountant or tax adviser before making a decision to sell.

If you're a mortgage adviser and want to show this calculator to clients on your own site, it's available as a white-label embeddable widget along with 32 other NZ-aware and AU-aware calculators.