The bright-line test for residential property
What the bright-line test is, how the dates work and who to ask before you sell.
- Selling a residential property within the bright-line period can make the profit taxable, unless an exclusion applies.What does Bright-line test mean?The bright-line test can make you pay income tax when you sell a home within the bright-line period, which IRD says is 2 years for property sold on or after 1 July 2024. Inland Revenue (IRD): The bright-line test
- The period runs between a start date and an end date. These are usually contract dates, not settlement.What does Settlement mean?Settlement day is the day you pay the balance of the purchase price and the property becomes yours. settled.govt.nz (Te Kāhui Kāinga Ora / REA): Settling on settlement day Check yours.
- A property that has been your main home may be excluded. Keep records of move-in dates and any periods rented.
- Inheritance and relationship property transfers have their own rules. Ask before you sell.
- Overseas owners can have tax withheld at sale. Plan for this before you sign.
Check the details. Check dates, exclusions and withholding with IRD or a NZ tax adviser before you sign a sale contract.
Facts we checked
- IRD says the bright-line period is 2 years for property sold on or after 1 July 2024.IRD · accessed 2026-10-29
- IRD says the test does not apply to a sale of property that has been your main home.IRD · accessed 2026-10-29
Official pages
Shortened from a Berry article first written 2026-05-02. Figures we could not check against a public source were taken out. This is general information, not advice.