Bright-line test
When you sell a residential property within the 2-year bright-line period, any profit will be taxable unless an exclusion or rollover relief applies.
This overview lists relevant items of public guidance on the bright-line test, organised by subject:
- General guidance for common situations
- Exclusions from the bright-line test and rollover relief
- Transactions involving different types of entities
- Specific scenarios
- Technical decision summaries
One topic customers often want to understand alongside the bright-line test is the tax treatment of short stay accommodation. See the short-stay accommodation overview for guidance on that topic.
The Commissioner issues different types of public guidance to cater for different customer needs. The different types of items are explained on About our publications.
General guidance for common situations
More general guidance on the application of the bright-line test is available on our main site.
| Title | Summary | Date issued |
|---|---|---|
|
How does the bright-line test apply to the sale of a subdivided section? QB 25/12 |
This QWBA explains when a section subdivided from residential land and sold within 2 years will be excluded from the bright-line test. This item replaces QB 18/16. |
09 May 2025 |
|
When is the bright-line start date for the 2-year bright-line test? QB 25/11 |
This QWBA provides guidance on the bright-line start date, to work out whether residential land is potentially subject to the 2-year bright-line test.
With QB 25/10 this item replaces QB 17/02 for disposal on or after 1 July 2024. |
09 May 2025 |
|
Bright-line test and family transactions (s CZ 39) IS 23/02 |
This IS considers the requirements of the 5 year bright-line test for residential land in s CZ 39 of the Income Tax Act 2007 and how it applies to certain family and close relationship transactions. | 20 Apr 2023 |
Exclusions from the bright-line test and rollover relief
| Title | Summary | Date issued |
|---|---|---|
|
This QWBA explains how the bright-line test and rollover relief provisions apply to transfers of residential land between associated persons on or after 1 July 2024. |
09 May 2025 | |
|
When is the sale of a lifestyle block excluded from the bright-line test? QB 25/13 |
This QWBA explains when lifestyle blocks sold within 2 years will be excluded from the bright-line test. It will be of interest to sellers seeking to rely on the farmland or main home exclusion. |
09 May 2025 |
|
QB 25/09 |
This QWBA provides guidance about when someone will have a “regular pattern” of transactions that prevents them from using the residential exclusion from s CB 6, and when someone will have a “regular pattern” of transactions that prevents them from using the main home exclusion from the 2-year bright-line test. This item replaces QB 16/07. |
09 May 2025 |
|
Income tax - bright-line test - main home exclusion - renting to flatmates QB 24/02 |
This QWBA clarifies the Commissioner’s view on how the main home exclusion to the bright-line test applies where a person rents out a room in their home to a flatmate. | 31 May 2024 |
|
QB 24/01 |
This QWBA explains how to determine a person’s main home for the purpose of the main home exclusion to the bright-line test where the person uses two or more homes as a residence. | 31 May 2024 |
Transactions involving different types of entities
| Title | Summary | Date issued |
|---|---|---|
|
Look-through companies and disposal of residential land under the bright-line test IS 25/15 |
This IS explains how the bright-line rules (including the main home exclusion and rollover relief) apply in various situations involving residential land and transfers involving a look-through company. |
12 May 2025 |
|
Income tax and GST - Amalgamations IS 25/10 |
This IS provides guidance on the tax treatment of company amalgamations. The bright-line test is highlighted in relation ss FO 10 of the Income Tax Act 2007 which discusses land passing between amalgamated companies and company interactions with the bright-line test. |
04 Apr 2025 |
|
Income tax - Application of the land sale rules to co-ownership changes and changes of trustees IS 22/03 |
This IS considers whether the land sale and bright-line rules in the Income Tax Act 2007 apply to changes to co-ownership of land and changes of trustees of a trust. |
14 Jun 2022 |
Specific scenarios
| Title | Summary | Date issued |
|---|---|---|
|
This QWBA considers the impact of the provisional tax rules on salary or wage earners who receive a one-off amount of income not taxed at source. These one-off amounts include bright-line income. This item replaces QB 19/03. |
28 Apr 2023 | |
|
Income tax: scenarios on tax avoidance - 2023 No 2 QB 23/02 |
This QWBA is one of two QWBAs that updates tax avoidance scenarios from earlier QWBAs that have become outdated. |
03 Feb 2023 |
|
Income tax: scenarios on tax avoidance - 2023 No 1 QB 23/01 |
This QWBA updates tax avoidance scenarios from earlier publications that have become outdated. | 03 Feb 2023 |
|
Income tax - tax issues arising from owning foreign residential rental property |
This interpretation statement explains the different matters you need to consider to comply with your New Zealand tax obligations when you own a foreign residential rental property, including discussion of the bright-line test. | 03 Jul 2020 |
Technical decision summaries
Technical Decision Summaries (TDS) are provided for information purposes only. They do not constitute advice, guidance, or an "official opinion of the Commissioner" as defined in section 3(1) of the Tax Administration Act 1994. They are not binding on the Commissioner and should not be relied on generally or for your specific circumstances.
| Title | Summary | |
|---|---|---|
|
Income tax: sale of properties; bright-line test |
11 Apr 2024 |