We are now officially in winter in New Zealand as the days are getting shorter and some of you are feeling the cold! However, despite the chill in the air, many property owners who have investment properties do have something to look forward to this winter. The Government has promised changes to the “bright-line” income tax rules, which could bring some much-needed warmth to their financial planning. Under the new proposed tax rules, investment properties sold on or after 1 July 2024 may only be subject to the bright-line tax rules if owned for less than two years. This is a significant reduction from the current five-year period. These changes will be highly beneficial for property owners who have been wanting to sell their investment property for a number of reasons but have had to hold back doing so because the bright-line income tax rules applied. The bright-line rules state that income tax must be paid on any profits made in the sale of residential property, with a few exclusions including if it is your main home. This means that property investors who have been holding onto their properties to avoid the tax can now consider selling sooner without the same tax burden. However, it’s not all straightforward. Before any property investment owner places their property on the market on or after 1 July 2024 and accepts an offer, we strongly recommend they still seek their accountant’s advice as there may be other income tax rules that could apply to the sale which they were not aware of. Each property sale is unique, and other factors may influence the final tax obligations. Some predict from 1 July 2024 there will be an influx of sales by property investment owners in New Zealand, so we will watch this space! This potential surge in property listings could create a more dynamic market, with increased activity benefiting buyers and sellers alike. Sellers might find it easier to attract buyers, while buyers could have more options to choose from. It’s an exciting time for the real estate market and staying informed and prepared will be key. If you need assistance with the legal process of selling or buying, we are always available to help. Navigating the legal intricacies of property transactions can be complex, but with the right support, it becomes manageable. So please do not hesitate to contact our property team by phone or email for a friendly chat. Whether you’re a first-time buyer or a seasoned investor, we’re here to provide the expertise and reassurance you need to make the best decisions in this evolving market. Stay warm, and let’s make this winter a season of positive change and growth for your property investments.
