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Income Tax Act 2007

Income - Income from business or trade-like activities - Exclusions for residential land

CB 16A: Main home exclusion for disposal within 10 years

You could also call this:

"You don't pay tax on your main home if you sell it within 10 years, under certain rules."

Illustration for Income Tax Act 2007

If you sell your main home, you might not have to pay tax on it. This rule is explained in section CB 6A. You can find more information about this in the Income Tax Act 2007. If you used the land as your main home for most of the time you owned it, you might not have to pay tax. There are some rules about what counts as your main home. You can read about these rules to see if they apply to you. Sometimes, you might not be able to use this rule if you have used it before. This can happen if you have sold another main home in the last two years. It can also happen if you have bought and sold several main homes in a short time. If someone else was using the property as their main home before you bought it, that time can count towards your total time. You can read more about this in section CB 6AB. There are some special rules about what counts as your main home. These rules are explained in the Income Tax Act 2007. You can read about them to see if they apply to you. You might be wondering what happens if you are part of a group of people who own a main home. In this case, the rules can be a bit different. You can read about these rules to see if they apply to you.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6663109.

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Topics:
Money and consumer rights > TaxesHousing and property > Buying and selling homes
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CB 15E: Disposals of land subject to section CW 3C, or

"Selling land you got from sharing with others: special rules apply"

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CB 16: Residential exclusion from sections CB 6 to CB 11, or

"Exemption from tax when selling your main home"

Part CIncome
Income from business or trade-like activities: Exclusions for residential land

CB 16AMain home exclusion for disposal within 10 years

  1. Section CB 6A does not apply to a person (person A) who disposes of residential land if, for the residential land (an exempt main home), all the days in the relevant bright-line period are exempted predominant main home days.

  2. Exempted predominant main home day means, for person A and residential land,—

  3. a day within the land’s bright-line period that the land has been used predominantly for a dwelling that was the main home for 1 or more main home persons:
    1. a day in a period that is equal to or shorter than the exempt main home period limit, if, for the period, the land has not been used predominantly for a dwelling that was the main home for 1 or more main home persons, but—
      1. the start of the period adjoins either a day described in paragraph (a) or the start of the land’s bright-line period; and
        1. the end of the period adjoins either a day described in paragraph (a) or the end of the land’s bright-line period.

        2. Exempt main home period limit means—

        3. 365 days:
          1. a reasonable period in the case of a period during which person A—
            1. constructs a dwelling used as a main home for 1 or more main home persons:
              1. remediates a dwelling affected by a North Island flooding event and that dwelling is used as a main home for 1 or more main home persons.

              2. Main home person means, for person A, 1 or more of the following people:

              3. person A:
                1. a beneficiary of a trust, if person A is a trustee of the trust that owns the residential land disposed of, and—
                  1. a principal settlor of the trust does not have a main home; or
                    1. if a principal settlor of the trust does have a main home, it is that main home that is being disposed of.

                    2. Repealed

                    3. For the purposes of determining whether subsection (1) applies, if person A was the transferee in a transaction to which section CB 6AB applied, the transferor’s use of the property is attributed to person A (for example, if the transferor used the property as a main home for 1 year, this is attributed to person A).

                    4. The exclusion in subsection (1) does not apply to person A if—

                    5. the exclusion has been used by person A 2 or more times within the 2 years immediately preceding the bright-line date for the residential land:
                      1. person A has engaged in a regular pattern of acquiring and disposing of exempt main homes described in subsection (1).

                        1. For the purposes of subsection (3)(b), in relation to exempt main homes described in subsection (1), person A includes a group of persons if the requirements of subsection (5) are met.

                        2. For the purposes of subsection (4), a group of persons—

                        3. means 2 or more persons when together all of the persons occupy, or have occupied, an exempt main home described in subsection (1); and
                          1. includes a person other than a natural person (the non-natural person), if another person referred to in paragraph (a) has significant involvement in, or control of, the activities of the non-natural person. For the avoidance of doubt, if the other person is able to direct, alone or as part of a group, the activities of the non-natural person, they have significant involvement in, or control of, the activities of the non-natural person.

                            1. Repealed

                            2. Repealed
                            Notes
                            • Section CB 16A: replaced (with effect on 27 March 2021), on , by section 10(1) (and see section 10(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                            • Section CB 16A(1) heading: replaced (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(1): replaced (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(1B) heading: inserted (with effect on 29 March 2018, until the replacement of section CB 16A with effect on 27 March 2021), on , by section 12(1) (and see section 12(7) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                            • Section CB 16A(1B) heading: inserted (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(1B): inserted (with effect on 29 March 2018, until the replacement of section CB 16A with effect on 27 March 2021), on , by section 12(1) (and see section 12(7) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                            • Section CB 16A(1B): inserted (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(1C) heading: inserted (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(1C): replaced (with effect on 8 January 2023), on , by section 12(2) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                            • Section CB 16A(1D) heading: inserted (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(1D): inserted (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(2) heading: repealed (with effect on 27 March 2021), on , pursuant to section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(2): repealed (with effect on 27 March 2021), on , by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(2B) heading: inserted (with effect on 27 March 2021), on , by section 12(3) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                            • Section CB 16A(2B): inserted (with effect on 27 March 2021), on , by section 12(3) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                            • Section CB 16A(3)(b): amended (with effect on 27 March 2021), on , by section 49(2) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(4): amended (with effect on 27 March 2021), on , by section 49(3) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(5)(a): amended (with effect on 27 March 2021), on , by section 49(4) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(6) heading: repealed (with effect on 27 March 2021), on , pursuant to section 49(5) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(6): repealed (with effect on 27 March 2021), on , by section 49(5) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A(7) heading: repealed (with effect on 27 March 2021), on , pursuant to section 9 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                            • Section CB 16A(7): repealed (with effect on 27 March 2021), on , by section 9 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                            • Section CB 16A list of defined terms exempt main home: inserted (with effect on 27 March 2021), on , by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A list of defined terms exempt main home period limit: inserted (with effect on 27 March 2021), on , by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A list of defined terms exempted predominant main home day: inserted (with effect on 27 March 2021), on , by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A list of defined terms main home person: inserted (with effect on 27 March 2021), on , by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                            • Section CB 16A list of defined terms North Island flooding events: inserted (with effect on 8 January 2023), on , by section 12(4) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).