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Income Tax Act 2007

Income - Income from business or trade-like activities

CB 6A: Disposal within 2 years: bright-line test for residential land

You could also call this:

“Selling your home within 2 years: what you need to know about paying tax”

If you sell residential land within two years of buying it, the money you make from the sale is considered income. Your bright-line start date is when you officially became the owner of the land, which is usually when the land transfer documents were registered under the Land Transfer Act 2017. There are different rules to figure out your bright-line start date, depending on how you got the land.

Your bright-line end date is when you sell the land, give it away, or it gets taken by the government. If you have a mortgage on the land and you default, the bright-line end date is when the mortgage lender sells the land. You can find more information about bright-line start and end dates in the rules.

This rule does not apply if you inherited the land or if you are selling it as part of a company merger. It also does not apply if other tax rules, such as sections CB 6 to CB 12, section CB 16A, or section FC 9, apply to your situation. You can find more information about these rules in the Income Tax Act 2007.

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This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6662300.

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"Income from selling personal property in your business"

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CB 6AB: Residential land transferred in relation to certain family trusts and other capacities, or

"This rule about residential land transfers involving family trusts has been removed"

Part C Income
Income from business or trade-like activities

CB 6ADisposal within 2 years: bright-line test for residential land

  1. An amount that a person derives from disposing of residential land is income of the person if the person’s bright-line end date is within 2 years of their bright-line start date.

  2. A person’s bright-line start date for their disposal of residential land is given in column 3 of the following table if the condition in column 2 of the relevant row is met for the person and the disposal:

    The following table is small in size and has 3 columns. Column 1 is headed Row. Column 2 is headed Condition to be satisfied. Column 3 is headed Bright-line start date for person’s disposal of residential land.
    Row Condition to be satisfied Bright-line start date for person’s disposal of residential land
    1 If none of the other rows apply The date on which the instrument to transfer the land to the person was registered under the Land Transfer Act 2017
    2 Land outside New Zealand The date on which the instrument to transfer the land to the person was registered under foreign laws of a similar nature to the Land Transfer Act 2017
    3 An instrument to transfer the land to the person was not registered before the person’s bright-line end date The date the person acquired an estate or interest in the land under section CB 15B
    4 The land was acquired from another person on completion of a land development or subdivision The date the sale and purchase agreement for the developed or subdivided land was entered into
    5 The land results from the person subdividing their land (the undivided land) The person’s bright-line start date for the undivided land
    5B The land results from the person subdividing land they co-own The date given by section CW 3C (Certain partitions or subdivisions of land)
    6 The land is a freehold estate converted from a lease with perpetual right of renewal The date of the grant of the leasehold estate
    7 A joint tenancy is converted to a tenancy in common or a tenancy in common is converted to a joint tenancy To the extent the person’s share or notional share in the land is unchanged, the person’s bright-line start date for the land before the conversion
    8 A change of trustees Where land is transferred from a trustee of a trust (trustee A) to another trustee of the trust (trustee B) as a result of a change in trustees, trustee B’s bright-line start date is the bright-line start date trustee A had for the land
    How to use this table: Read column 2 from top to bottom to find the condition that applies. For the condition in column 2 that is met, the person’s bright-line start date is the date in column 3 of that same row.

  3. For the purposes of subsection (2), when a person who owns land (pre-existing land) has more land transferred to them (the transferred land) or transfers part of their pre-existing land (also the transferred land) to another person, the instrument of transfer for the transferred land is treated as being for the transferred land only and not being for the pre-existing land.

  4. Bright-line end date, for a person’s disposal of residential land, means—

  5. the earliest of—
    1. the date the person enters into an agreement for the disposal:
      1. the date on which the person makes a gift of the land:
        1. the date on which the land is compulsorily acquired under any Act by the Crown, a local authority, or a public authority:
          1. if there is a mortgage secured on the land, the date on which the land is disposed of by or for the mortgagee because the mortgagor defaulted; or
          2. if none of paragraph (a)(i) to (iv) apply, the date on which the estate or interest in the land is disposed of.

            1. This section does not apply—

            2. to a disposal of land by—
              1. an executor or administrator who acquired the land in the circumstances described in section FC 1(1)(a) (Disposals to which this subpart applies):
                1. a beneficiary who acquired the land in the circumstances described in section FC 1(1)(b):
                2. if—
                  1. any of sections CB 6 to CB 12 apply:
                    1. section CB 16A applies:
                      1. section FC 9 (Residential land transferred to executor, administrator, or beneficiary on death of person) applies.

                      2. This section is modified by sections FB 3A, FO 10, and FO 17 (which provide rollover relief for land transferred on settlement of relationship property or company amalgamation) and subpart FD (Rollover relief from the bright-line test).

                      Notes
                      • Section CB 6A: replaced, on , by section 8(3) (and see section 8(4) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                      • Section CB 6A table row 5B: inserted (with effect on 1 July 2024), on , by section 5(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section CB 6A(5): replaced (with effect on 1 July 2024), on , by section 5(2) (and see section 5(3) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).