Q We sold an apartment early last year, thinking it was just over five years from purchase, not understanding the five years only starts from settlement and ends at agreement to sell. We received a letter from the IRD that we will have to pay tax after falling short of the five-year rule by 10 days. Under the government's new rules for the bright-line test will we still have to pay this tax?
A Yes, the new government has signalled it will restore the bright-line to two years; the suggestion is that once the law change is in place any property that has been held for a two-year period will fall outside of its bright-line period. Your tax liability is determined by the bright-line rules that were in place at the point of disposal, so any gain will be subject to bright-line.
For the benefit of other readers, which bright-line rule applies is determined by what is in place legally at the point the property is acquired, which is the date an agreement for sale and purchase is
