Five year test a better bright line test
The National Government still has time to extend the bright line test to five years to better curb rampant housing
speculation, the Green Party said today.
National’s “bright line” rules will apply tomorrow, requiring income tax to be paid on any gains from residential
property purchased and sold within two years, with some exceptions.
“National’s moves to clarify the law around capital gains taxes on property will curb some speculation but a five-year
bright line test would be more effective,” said Green Party finance spokesperson Julie Anne Genter.
“A majority of countries in the developed world with a capital gains tax on property have a bright line test of five
years or more.
“Those countries that have a one-to-two year bright line test do not exempt the owner’s main home, other than some rare
exceptions.
“By extending the bright line test to five years, you will capture more of the damaging property speculation that has
been driving housing prices up in Auckland and elsewhere to unaffordable levels.
“Reserve Bank mortgage lending data for the year to August shows the extent of New Zealand’s housing speculation
problem, with 45 percent of all mortgage lending going to property investors compared to just 12 percent going to first
home buyers.”
The Green Party has supported the bright line legislation on its First Reading and will be working in Select Committee
to make constructive changes to the Bill. Its preferred policy remains a comprehensive tax on capital gains excluding
the family home.
ENDS