The bright-line test means if you sell a residential property within a set period after acquiring it, you will be required to pay income tax on any profit made from the property increasing in value. The current bright-line period is 5 years. The government has announced it intends to extend the bright-line period to 10 years for residential property, except newly built houses (new builds). Inherited properties and those which have been the owner’s main home for the entire time they owned it will continue to be exempt from all bright-line tests. To determine what length of bright-line test a property is subject to, the following flowchart can be used. The new rule will apply to property acquired on or after 27 March.
