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Brightline test - does this include renovations?

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  • Brightline test - does this include renovations?

    Hi, I bought a property in 2016 and immediatly did 30k worth of repairs and upgrades - new kitchen and dvs included. Both of these are depreciable items so not listed as a repair. Does my purchase price include the 30k for Brightline test? Am I even subject to this since it only applies to houses sold within 2 years until 2018?

  • #2
    Hi Caleb,

    If that property was bought as a buy and hold investment and you were not developing or trading property as a GST taxable activity at the same time as you purchased then BL probably doesn't apply (just ask your accountant quickly). I don't know if capital expenditure is added to the cost for purposes of BL. I would hope that it is!
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    • #3
      The brightline exemption of houses sold within 2 years only applies to owner occupied homes, not investments. As Nick says, a quick call to your accountant should answer your questions.


      • #4
        Capital expenditure on the property is added to the initial cost of the property for bright line purposes. If you buy something for $200k, spend $50k renovating it, and then sell it for $300k, your Brightline profit is $50k; 300-(200+50).

        But in your case if you bought in 2016, you bought during the time when Brightline was only 2 years, so you are outside that period now; no brightline calculation.

        Not sure what MargVan means above about the brightline exemption of houses sold within two years only applies to owner occupied homes. This is either poorly worded or incorrect. There is an exemption from brightline for owner occupied homes. But there is no two year exemption.
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