From 1 July 2024, the 5- and 10-year bright-line tests for residential land were reduced to 2 years, meaning that if you sell a residential property within two years of purchase (on or after 1 July 2024), any profit is subject to tax.
This rule aims to curb property speculation and ensure property transactions are fair and transparent. The main home exclusion criteria were also adjusted. Now, if your property has been used as a main home for more than 50% of the time and you have used more than 50% of your property’s area as your main home, the exclusion applies in full. For homeowners, this simple “all or nothing” approach is much clearer.
In a significant policy shift, the Government has phased back interest deductibility for residential investment properties. Starting from 1 April 2024, 80% of interest costs were deductible, and from 1 April 2025, interest will be fully deductible. This change is expected to provide relief for property investors and stimulate investment in the housing market.
Have you adjusted your property tax strategy? Talk to us today about how this affects your portfolio - enquiries@oxfordedge.co.nz
