Recent Legislation Updates – Residential Property Investment - Part 1

Bright-Line Test

If you sell a residential property within a set time-frame after acquiring it, you are required to

pay income tax on any profit made through the increase of value of the property. Recent changes to this legislation show the following periods are now liable:

  • 10 Years if acquired on or after 27ᵗʰ March 2021

  • New Build Bright-Line Test - New builds acquired on or after 27ᵗʰ March 2021 will be subject to 5 year bright-line test rather than 10 years.

  • 5 Years if acquired between 29ᵗʰ March 2018 and 26ᵗʰ March 2021 inclusive

  • 2 Years if acquired between 1ˢᵗ October 2015 and 28ᵗʰ March 2018 inclusive

Treatment of Short-Stay Accommodation

Due to the amendment of the definition of ‘residential land’, If you own a property used to provide short-stay accommodation e.g. AirBNB that is not your main home, you are unable to qualify for the business premises exclusion for the purposes of the bright-line test and the residential loss ring-fencing rules. This applies to the following periods:

  • Bright-Line Rules - applies to property acquired on or after 27ᵗʰ March 2021

  • Residential Loss Ring-Fencing Rules – applies from the 2021-2022 income year onwards (regardless of when the property was acquired)

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