As part of a major housing announcement today, the Government announced the bright-line test will be extended from five to ten years. The new rule will apply to property acquired on or after 27 March 2021.
The bright-line test requires those who buy and sell a residential property within 10 years, that isn't their main home, to pay income tax on any profit. The 10-year period begins on the date property is acquired. This will generally be the date a binding sale and purchase agreement becomes unconditional, but there are some qualifications to this.
The bright line test will remain at five years for new builds.
The other key announcement today is that mortgage interest deductibility for residential property investments is to be eliminated. No deductibility will be available for properties bought after 27 March 2021, and the amount that can be deducted for other properties will drop until it is phased out over four years.
If you need further assistance on how this might affect you please contact the Property Law experts at TODD & WALKER Law.