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It's hard to disagree with Nicola Willis on this one - where the IRD in a couple of weeks will reveal the final version of the IRD interpretation of the Labour Government's 2021 changes to property taxes.
As it stands - the current IRD interpretation of the 10 year bright-line test is worrying to homeowners. Yes, not investors but people that own just 'one' home!
Don't relocate for work! Or don't move out of a damaged property to repair it - if you're away from it for more than 12 mths and you then repair it and sell it within the bright-line period expect a nice CGT bill!
When National brought in the bright line test - setting it at 2 years - the family home was excluded. Labour changed the meaning of family home and now.....
ACT don't want the bright line at all. National will revert back to Key's version - 2 year and a tighter definition of the family home.
cheers,
Donna
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As it stands - the current IRD interpretation of the 10 year bright-line test is worrying to homeowners. Yes, not investors but people that own just 'one' home!
The rules state that even if a person owns only one home, and their spouse and school-age children live in that home the whole time it has been owned, they will be hit with the tax if they spend 12 months or more away - even if their spouse and children stay living there, and they continue to visit.
When National brought in the bright line test - setting it at 2 years - the family home was excluded. Labour changed the meaning of family home and now.....
The IRD’s interpretation says that a person’s capital gains are captured by the tax if they are away from the home for 12 consecutive months or more in the bright-line period - even if the home is the only residential property they own.
An example used by the IRD says that even if someone’s spouse and school-age children live in the house for the entire time they are away, they are still captured by the rules, making them liable for tax on their capital gains of up to 39 percent - one of the highest rates of capital gains tax in the world.
An example used by the IRD says that even if someone’s spouse and school-age children live in the house for the entire time they are away, they are still captured by the rules, making them liable for tax on their capital gains of up to 39 percent - one of the highest rates of capital gains tax in the world.
cheers,
Donna
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