What if I bought before 1 July 2024?

The rule in force when you acquired the property is the rule that applied originally — 2 years for purchases before 29 March 2018, 5 years from 29 March 2018 to 26 March 2021, 10 years from 27 March 2021 to 30 June 2024. However, for sales on or after 1 July 2024 the current 2-year period now applies regardless of when you bought, by transitional rule. So a property bought in 2022 (originally 10-year) sold in 2025 is outside bright-line — more than 2 years between acquisition and disposal. Source: IRD.

Does the main home exclusion always apply?

No. The main-home exclusion requires the property to have been used predominantly as your main home for more than 50% of the bright-line period, and used by you (or your immediate family). If you rented it out for most of the bright-line period, or if it was an investment property you later moved into briefly, the exclusion will not cover the full gain. Apportionment can apply where main-home use was partial.

Does it apply to commercial property?

No. The bright-line rule applies only to residential land — defined to include houses, apartments, vacant residential sections, and bare land that could reasonably be used for residential purposes. Commercial property, farmland, and industrial sites are outside bright-line. They may still be taxable on disposal under other rules (e.g. acquired with the dominant purpose of resale, or as part of a business of dealing in land).

What if I inherit a property and sell it?

The inherited-property exclusion takes inherited residential land outside the bright-line rule entirely, regardless of how soon you sell. The exclusion covers transfers by will, intestacy or under the Family Protection Act. Gifts during the donor’s lifetime are not inheritances and are not covered — they continue to fall under the standard bright-line rules with the donor’s acquisition date treated as the recipient’s start.

Property Published 2026-06-06 · 7 min read

NZ bright-line property rule — 2-year period since 1 July 2024

What the bright-line rule taxes, the current 2-year period in force since 1 July 2024, the three historical periods that still affect older holdings, the main-home and inherited-property exclusions, and how the taxable gain is worked out. Sourced from IRD.

In one paragraph

The bright-line property rule taxes the gain on residential land sold within a set period of acquisition. From 1 July 2024 the period is 2 years. Sell after that 2-year line and the gain is not taxable under bright-line (other land-tax rules may still apply). The rule has had three earlier periods — 2 years (Oct 2015 – Mar 2018), 5 years (Mar 2018 – Mar 2021), 10 years (Mar 2021 – Jun 2024). Main homes and inherited property have separate exclusions. Source: IRD — bright-line property rule.

The current 2-year rule (since 1 July 2024)

Residential land sold on or after 1 July 2024 is subject to bright-line if the disposal is within 2 years of the acquisition date. The 2024 change shortened the period from 10 years — the National-led Government’s position was that the 10-year rule was discouraging supply in the rental market. The 2-year period now applies to all sales from 1 July 2024 regardless of when the property was originally acquired. Source: IRD — bright-line property rule.

The three historical periods

The rule was introduced on 1 October 2015 and has had four versions:

1 October 2015 – 28 March 2018: 2 years
29 March 2018 – 26 March 2021: 5 years
27 March 2021 – 30 June 2024: 10 years (5 years for "new builds")
1 July 2024 onwards: 2 years (the current rule)

For disposals on or after 1 July 2024 the current 2-year period applies regardless of when you bought. For disposals before 1 July 2024 the rule in force at the date of sale applied — that history is what made the rule confusing and is why most pre-2024 case studies you find online are no longer current.

Main-home exclusion

The main-home exclusion takes a property outside bright-line if it was used predominantly as your main home for more than 50% of the bright-line period, by you or your immediate family. Apportionment applies where the main-home use was partial — for example a property used as your main home for the first 12 months of a 24-month holding then rented for the next 12 months would be apportioned 50/50.

The exclusion is "use" based, not "intention" based — buying a property intending to live in it but never moving in does not qualify.

Inherited-property exclusion

Property received under a will, on intestacy, or under the Family Protection Act 1955 is entirely outside the bright-line rule. The recipient can sell at any time without bright-line tax. The exclusion does not extend to lifetime gifts — those carry over the donor’s original acquisition date to the recipient.

How the acquisition date is determined

Acquisition date for bright-line is generally the date legal title is transferred to you (the date of registration of the transfer at LINZ). For "off the plan" purchases this is typically settlement, not the date the sale and purchase agreement was signed. Disposal date is the date the new sale and purchase agreement is signed (note: signed, not settled — this is the asymmetric edge of the rule that catches some sellers). The bright-line window runs from acquisition date to disposal date.

How the gain is calculated

The taxable gain is the sale proceeds minus the cost base. Cost base includes:

Purchase price
Legal fees and disbursements on purchase and sale
Real-estate agent commission on sale
Capital improvements (e.g. extensions, structural work) but not routine repairs

The net gain is added to your other taxable income for the year and taxed at your marginal income-tax rate (see our NZ income tax rates 2026 page). It is not a separate "capital gains tax" — bright-line is a deeming rule that turns a property gain into ordinary income.

Related on TaxAccountants.co.nz

NZ income tax rates 2026 — the marginal rate your bright-line gain is taxed at.
NZ GST rate — when residential land transactions interact with GST.
Provisional tax 2026 — a large bright-line gain can pull you into the provisional-tax regime.
NZ tax calculator — estimate the tax on a combined salary plus bright-line gain.

Selling within 2 years of purchase?

The main-home apportionment, off-the-plan acquisition date, and capital-improvements adjustments are the three places bright-line returns most often go wrong. We refer every quote request to Lynch & Associates, our Auckland partner firm of CAANZ-member accountants and IRD-registered tax agents, who will reply within one business day.

Get a quote — free for users

Sources

IRD — bright-line property rule

Editorial note: The bright-line period has changed four times since 2015. Verified 2026-06-06; we refresh this page when any rule change is announced.

Disclosure: TaxAccountants.co.nz is an introduction service. Quote requests are referred to Lynch & Associates Chartered Accountants.