Relief is on the way for many property owners come 1 July 2024. The current bright-line tax rules, introduced under the previous government, are being significantly altered. These rules essentially taxed capital gains on the sale of a property that wasn’t a person’s main home, if it was sold within 10 years of it being acquired. They are now being reduced to apply to a two-year period.

This means that soon all property bought before 1 July 2022 can be sold without triggering the bright-line rules. This change will apply irrespective of what bright-line rule a property may have been bought under.

This will come as welcome news for those who own properties currently caught by the existing, and often restrictive, bright-line rules. Property owners often face situations where selling their property is necessary, but the current bright-line rules and the potentially hefty tax bill that comes with it, make this a difficult and expensive option.

We are hearing from clients who intend to sell their properties when they are no longer subject to the old bright-line rules. It is important to get specific advice from your accountant and lawyer on how the bright-line rules will impact you. In most cases, the bright-line period will start when the transfer of the property is registered, and end on the date which the owner enters into an agreement for the disposal of the land (whether conditional or unconditional), but there are exceptions to this. This is not always straight forward.

Property owners also need to keep in mind that there will be circumstances that the bright-line rule will not apply when selling their property, but other tax rules come into play. Examples of this include where a property is bought with the intention to sell, or a property owner has a regular pattern of buying and selling property.

White Fox & Jones are experts in residential property transactions, and we can provide practical advice, support, and guidance on navigating these changes to ensure there are no nasty tax surprises when you decide to sell your property.