– the bright-line test.
The Government is not wasting time considering legislation that will extend the bright-line test on residential property sales from two years to five years as part of the its crack-down on property speculators. This means that profits from properties which are bought and sold within five years will generally be taxable.
The Government view is that the measure will help dampen property speculation and bring fairness back to the tax system. It considers reducing speculative demand will also help improve housing affordability for owner-occupiers. Current exemptions from the bright line test will remain. This includes the exemption for the main home of owner-occupiers of residential property.
In response to the announcement some tax pundits have spoken out that the proposed changes would have unintended consequences if the circumstances of owners changed and it has been pointed out that the regulatory impact statement suggests the new test might push up rents and house prices.
