Government removes blanket family home exemption for extended bright-line test

PHOTO: The jury’s still out on how much impact the first-home buyers package will have (File image). Photo: RNZ / Nate McKinnon

The government has taken aim at property speculators with investment houses bought from this Saturday subject to tough new tax rules.

The blanket exemption for the family home has also been quietly removed – allowing for a scenario where if it’s not used as such for more than a year, it becomes subject to the bright-line test, under which people are taxed on the capital gain of houses bought and sold within a certain period of time.

Finance Minister Grant Robertson also disregarded the advice of Treasury, that wanted the bright-line test to go to 20 years.

However, the two main changes the government will progress are designed to hit investors’ back pocket and discourage investors buying multiple properties and flicking them off for a healthy profit.

The first is doubling the bright line test from five to 10 years, the second removing the ability to claim against mortgage interest as a deduction.

They’re part of a whole bag of policies as well as the tax changes, there’s nearly $4 billion for roads and pipes for new developments, a push for more public housing and apprentices, and new rules for people to access more money for deposits through government schemes.