The bright line tax property rule says you’ll pay tax when you buy and sell a residential property unless the home you are selling, is your main home.

It's important to note that for need to have used a property as your main home for 50% or more of the time that you’ve owned it and used 50% of the area of the property as your main home. For example, if you use 40% of a property as your home and 60% as a rental property, you can’t use the main home exception.

Another important note to make is that you can't use the main home exception more than twice over any two-year period.

This includes if the property is located overseas.

If the home is held in a trust, the main home exception can still apply if the house sold was the main home of the principal settlor of the trust (the person who has made the biggest financial contribution to the trust), or the principal settlor didn’t have a main home, and it was the main home of a beneficiary of the trust.he bright-line rule does not apply if you sell a property you inherited.

The bright line tax rule does not apply if you inherit a home

So, if the residential home you're selling is not your main home and you bought it from the 1 October 2015 to 28 March 2018, inclusive: the two year bright-line rule applies.
If you bought the property on or after 29 March 2018: the five year bright-line rule applies.

But whenever you buy a property intending to resell it, you’ll need to pay tax on any profit you make when you sell that property.

Before you pay the income tax you owe on your property sale, you’ll need to complete an income tax return. You’ll generally include the amount of property income you’ve earned in the “other income” box on your return.

You’ll also complete an IR833 Property Sale Information form and submit this along with your income tax return.

The property market in Auckland remains balanced and stable with homes turning over at a relatively slower rate in recent months as listings remain relatively high.

We are finding homes are taking a while longer to sell given the current stock levels, however, there is still a good percentage of homes selling each month and values are reasonably consistent. Sellers are finding that in a balanced market, prices need to be competitive from the get-go and aligned with current market conditions and buyer activity if they are to sell. The silver lining to that, of course, is that prices are relative; so, if you're buying and selling in Auckland in the same market, it balances out.

It's also worth noting that in Auckland over the past 20 years, property prices have nearly doubled every 10 years, as the median 10 year rise is 96% which you can see in the chart below (this data is using REINZ House Price Index). When you compare this to all of NZ, Auckland has sustained a relatively consistent higher 10 year growth in prices that are well ahead of the NZ total at 88%.

Regardless of the rates of values and turn over, the balance between demand and supply always needs to be considered in assessing market activity and property values.

Source

Figures presented by CoreLogic showed that the more expensive the property, the more likely it was to sell at a lower price compared to its CV.

In the past three months, homes with CVs higher than $1 million have typically been selling for prices 1–4% below their CV. Mid-priced homes with CVs between $800,000–$1M have typically been selling for prices close to their council value.

Homes with CVs below $650,000 are still selling for prices as high as 9% above their CV.So how is a CV calculated exactly?Property Institute of New Zealand Chief Executive, Ashley Church, says that the valuations are a ‘guesstimate’ rather than an accurate indicator of what a home is actually worth. “CVs are conducted once every 3 years and they’re a ‘snapshot’ of the approximate value of any given property at that moment in time.

They shouldn’t be regarded as an exact measure of the value of a home — and they’re certainly not intended to provide an ongoing price guide.”The methodology for a Council Valuation is very different to a formal valuation. A CV is a blunt instrument. It’s a computer based assessment of the value of your home based on what other homes in your area have sold for; whereas a formal Registered Valuation is conducted onsite and takes account of the condition of your home, any renovations you might have made, whether you have a pool, the number of bedrooms you might have, the condition of your home — all of the things that make it unique.

Mr Church says that the question of the value of your home has also been further confused by the recent proliferation of ‘free’ online home valuation services. “There are a couple of paid services that are getting much better at remote assessment – but the free ones are generally about as effective as reading tealeaves or chicken entrails and their advice should be treated with a grain of salt.”