The Minister of Finance, Hon Grant Robertson, has announced proposed changes for residential property acquired on or after 27 March 2021. The proposed changes include:
- extending the bright-line test to 10 years
- amending the main home exclusion which would require tax to be paid on gains made for periods the property is not used as the owner’s main home
- allowing newly built homes to use a 5 year bright-line test
- not allowing property owners to claim interest on loans used for residential properties as an expense against their income from those properties. This would start from 1 October 2021, and would also be phased in over 4 years for existing properties. There would be an exemption for newly built homes.
As you can see there is some “aggressive” rules being proposed which will definitely shape property investment going forward.
If you have a purchase contract in progress it gets really complicated and 27 March 2021 becomes the key date. Please contact us if you are in this situation.