The short version
- Residential property sold on or after 1 July 2024 is taxed under the bright-line test if sold within 2 years of buying
- The period usually runs from settlement when you bought to the date you sign the agreement to sell
- Your main home is excluded if you lived in it for all or most of the time you owned it
- A bright-line loss can only be offset against other land sale gains
What it is
The bright-line test taxes the gain on residential land sold within a set period of buying it, regardless of why you sold. For sales on or after 1 July 2024 the period is two years. Sales before that date fell under the earlier five- and ten-year rules.
How the period is counted
The clock usually starts on the date the title was transferred to you when you bought, which is normally settlement, and ends on the date you sign an agreement to sell. Buying off the plans and some other situations have their own start dates, so check before you sign anything.
The main home exclusion
A property is excluded if it was your main home for all or most of the time you owned it. If you own more than one home, only the one you mainly lived in qualifies, and a home held in a trust can qualify in some cases. The exclusion is not available to people who regularly buy and sell their homes.
Other exclusions and relief
- Inherited property.
- Transfers under a relationship property agreement.
- Rollover relief for certain transfers, for example to a family trust or a look-through company, where the original purchase date carries over.
If the sale is taxable
The gain is the sale price less what you paid, capital improvements and selling costs, and it is taxed at your marginal rate in the year of sale. Losses are ring-fenced: they can only be used against other land sale gains, not your salary. The bright-line test also sits alongside the older land rules, so a property bought with the intention of resale, or by someone in the building or dealing business, can be taxable even after two years.
Before you sell
Check the dates, work out whether an exclusion applies and plan for the tax before you accept an offer. Send us the sale and purchase agreements and the settlement statements and we will do the rest. Our rental property check is a good place to start.
General information only. Talk to us about your own situation before acting on it.
