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Bright-Line Test Calculator

Determine if your property sale is subject to the bright-line test and estimate the tax owed. Covers the 2-year rule for new builds and other properties.

By Konstantin IakovlevPublished 28 March 2026Last reviewed
Updated 2026-27 FYData stays on your deviceIRD sourced data

About this calculator

This calculator implements bright-line property rule (2-year) from Inland Revenue (IRD). Last consulted 1 April 2026. Verify the figures yourself by following the link.

Current NZ bright-line property rule

Effective 1 July 2024 (shortened from 10/5 years)
  • •Current bright-line period: 2 years
  • •Tax rate on gain: Marginal income tax (10.5–39%)
  • •Family home: Exempt (if main home >50% time)
  • •New builds (older period): 5 years (purchases 27 Mar 2021–30 Jun 2024)
  • •Inheritance / relationship: Exempt transfers

Source: IRD — Bright-line

Disclaimer

This calculator provides estimates for general information purposes only. Results should not be relied upon as professional financial, tax, or legal advice. Tax rates and thresholds are based on publicly available IRD data and may change. Always consult a qualified tax agent or financial adviser for advice specific to your circumstances.

How the bright-line property test works

If you sell residential property within 2 years of acquiring (for sales from 1 Jul 2024), the gain is treated as taxable income. Family home, inherited property, and relationship-property transfers are exempt.

  1. 1

    Check if you're inside the 2-year window

    Days_held = sale_date − acquisition_date  →  If < 730 days → bright-line applies

    Pre-Jul-2024 sales: 10-year period (5-year for new builds).

  2. 2

    Calculate the taxable gain

    Gain = sale_price − purchase_price − allowable_costs (legal, agent, improvements)

    Improvements (renovations) deductible; ordinary maintenance is not.

  3. 3

    Apply marginal income tax rate

    Tax_payable = taxable_gain × marginal_rate (10.5–39%)

    Gain stacks on other income — usually hits 33% or 39%.

  4. 4

    Family home exemption

    Exempt if used as main home for > 50% of ownership period

    Only the part used as family home is exempt — partial rental triggers partial tax.

Worked example

Inputs: Bought rental $500k, sold $600k after 18 months

Result: Within 2-yr window → Gain $100k × 33% = $33,000 tax.

Frequently Asked Questions

What is the bright-line test?
The bright-line test is a New Zealand rule that taxes profits from the sale of residential property if it is sold within a set period after purchase. The test uses a simple date-based rule: if you acquired the property on or after 1 July 2024, a two-year bright-line period applies; if acquired between 27 March 2021 and 1 July 2024, the period is ten years; and if acquired before 27 March 2021, a five-year rule applies. The main home exclusion may apply if the property was your primary residence for the whole period. Any profit (sale price minus purchase price, costs, and improvements) is taxed as ordinary income at your marginal tax rate. For example, a $200,000 profit for someone in the 33% bracket would result in $66,000 in tax. Source: IRD — Bright-Line Property Rule (ird.govt.nz/property).
Are there exemptions from the bright-line test?
Yes, there are several important exemptions from the bright-line test. The main home exclusion applies if the property was your primary residence for the majority of the time you owned it — however, this exemption is limited if you are a regular property developer or have used the bright-line main home exemption more than once in a two-year period. Inherited properties are exempt from the bright-line test regardless of when they are sold. Properties transferred as part of a relationship property settlement under the Property (Relationships) Act 1976 are also exempt. Additionally, if the property was acquired through the exercise of a lease option before 29 March 2018, different rules may apply. Always consult a tax advisor or IRD directly to determine whether an exemption applies to your specific situation. Source: IRD — Bright-Line Exemptions (ird.govt.nz/property).
What is the bright-line test for property in NZ?
The bright-line test is a New Zealand tax rule that taxes profits from selling residential property within a certain time period of buying it. The current bright-line period is 2 years for residential property (down from 10 years in 2024). If you sell within 2 years, the gain is taxable as ordinary income at your marginal tax rate (10.5–39%). Exemptions include your main home, inherited property, and property transferred under a relationship settlement. New builds and farmland have separate rules. Source: IRD — Bright-line property rule.

The NZ bright-line test taxes profits from selling residential property within a set period. For properties acquired before 27 March 2021 the period is 5 years; for properties acquired on/after 27 March 2021 through to 1 July 2024 the period is 10 years; for properties acquired on/after 1 July 2024 the period reverts to 2 years. The family home and inherited properties are generally exempt.

How this calculator works

Bright-line income = sale price minus acquisition cost minus improvement costs minus selling costs. This income is added to your other income and taxed at your marginal rate.

Bright-Line Test Periods

Acquired before 27 Mar 20215-year bright-line period
Acquired 27 Mar 2021 – 1 Jul 202410-year bright-line period
Acquired on/after 1 Jul 20242-year bright-line period

The period runs from the date of acquisition to the date of sale.

Exemptions

Main home (family home)Generally exempt if used as main home throughout
Inherited propertyExempt from bright-line test
Relationship property settlementsGenerally exempt

Worked Examples

Property bought $750,000 on 15 Aug 2022, sold $900,000 on 1 Feb 2024

Bright-line applies (within 10-year period). Gain $150,000 taxed at 33% = $49,500 tax.

  1. Acquisition date: 15 Aug 2022 → 10-year bright-line period applies
  2. Sale date: 1 Feb 2024 — within the 10-year period
  3. Sale price: $900,000
  4. Acquisition cost: $750,000
  5. Bright-line income: $900,000 − $750,000 = $150,000
  6. Added to other income; taxed at marginal rate 33%
  7. Tax on bright-line gain: $150,000 × 33% = $49,500

Property bought $600,000 on 1 Aug 2024, sold $700,000 on 15 Sep 2026

Bright-line does NOT apply — sale is beyond the 2-year period. Gain is exempt.

  1. Acquisition date: 1 Aug 2024 → 2-year bright-line period applies
  2. Sale date: 15 Sep 2026 — more than 2 years after acquisition
  3. Property is outside the bright-line period
  4. No bright-line tax applies; gain is exempt (assuming not a dealer/trader)

Built and maintained by Konstantin Iakovlev. Data sourced from the IRD and official New Zealand government sources.

Last reviewed:

Official Sources

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