So confusing this bright line test
| # | Post |
|---|---|
| 1 | Wouldn't mind some clarity if people know for sure , my accountant says the main home is exempt from any tax implications , lawyer is unsure , I look it up in ird and it says if you show a pattern of selling main home you could be liable .. Iam considering selling main and only home in Feb , it was a poor decision location wise but needed to get back in market , however I sold previous house 1 year before . So if I sell it would be 2 in 2 years .. just wondering if I would fall under the bright line test umbrella ? daz1968 - 2021-11-03 13:55:00 |
| 2 | My reading is that you lose the exemption if you: "have used the main home exclusion twice or more over the 2-year period immediately before you sold your main home" So it affects the third transaction AFTER you've sold twice. So as long as you don't sell in a year (exact timing dependent on when you sold the first one) then you're OK. But your accountant should know. sparkychap - 2021-11-03 14:46:00 |
| 3 | Like sparky says your accountant knows more about tax implications than your lawyer. If you don't have one, get one. I would not recommend trying to work it out yourself. Tax is not something where ignorance is a defence. oakcottage - 2021-11-03 15:17:00 |
| 4 | Maybe I need a new accountant because he told me it's exempt as it's my main and only house , but even I know the rules have changed in March this year and that previous main house exemption rule isn't always the case , I've also read what sparkychap said you can sell twice immediately before selling and I presume it's the third transaction that's the issue .. if I sell it will be my second in the 2 year period so maybe I'm safe .. this time I will buy daz1968 - 2021-11-03 16:00:00 |
| 5 | No you will not come under the bright line test. You are living in the house, this is your main house, the rules are easy to follow. If your worried just call inland revenue, they will clear it up for you. easy. msigg - 2021-11-03 20:26:00 |
| 6 | msigg wrote: daz1968 - 2021-11-03 20:41:00 |
| 7 | But Sparky is right even if it is your main home you can only use the exemption twice in a 2 year period, if you buy a new house and then decide its not right and sell making it a 3rd sale within 24 months then that sale would be liable for capital gains tax, your accountant has given you the correct information. lizzyj - 2021-11-04 09:26:00 |
| 8 | I definately plan to get it 100% right this time , to avoid a third sale plus I'm over shifting anyway .. but yes the words 2 sales immediately before selling in a 2 year period , which is what my situation would be so seems like I will be fine to go ahead and get the right location daz1968 - 2021-11-04 10:42:00 |
| 9 | oakcottage wrote: Didn't you read the OP message. FYI in their first line they stated 'my accountant says......'. then you go and say 'if you don't have one get one'. No wonder so many people go round in circles doing stupid stuff ......... brouser3 - 2021-11-04 11:29:00 |
| 10 | brouser3 wrote:
Yes I did miss that. Read it too quick. Only saw the lawyer part. Didn't think I needed to come back and apologise because OP wasn't upset about my post. But hey if you need one....soz. What does "no wonder people go round in circles doing stupid stuff" mean in relation to me? Where am I circling? Many people misread posts. Doesn't make them stupid. But if it makes you feel better to call people stupid I hope you feel better. oakcottage - 2021-11-04 11:36:00 |
| 11 | oakcottage wrote: . I knew what you meant and appreciated your other comments , most info is helpful :) daz1968 - 2021-11-04 16:41:00 |
| 12 | daz1968 wrote: goes to intent with regards to ird. gabbysnana - 2021-11-04 19:41:00 |
| 13 | gabbysnana wrote: No it doesn't. That's the very concept of a "brightline test" - it was introduced to remove the confusion and ambiguity around "intent". "The term 'bright-line test' is a legal term in US constitutional law. It means "a clearly defined rule or standard that uses objective points to avoid ambiguity". By making the rule clear and unambiguous, a bright-line test is intended to have consistent outcomes when it is applied sparkychap - 2021-11-05 06:59:00 |
| 14 | The intention test can still apply even if the bright-line doesn't.. artemis - 2021-11-05 09:01:00 |
| 15 | Exactly above, it's all about intent. msigg - 2021-11-05 09:42:00 |
| 16 | msigg wrote: No it’s not. You can only use your own home exemption as per the rules, regardless of intent. If you buy and sell a rental / investment property within the time limits, you will be liable for tax, regardless of intent. Edited by sparkychap at 10:44 am, Fri 5 Nov sparkychap - 2021-11-05 10:38:00 |
| 17 | artemis wrote: agreed. sparkychap - 2021-11-05 10:46:00 |
| 18 | I spoke to an accountant today , he is double checking with his tax team Monday but is pretty sure it's okay for me to sell again in summer , but did stress that a pattern is starting and need to get it right this time .. but the rule two sales in 2 years immediately before selling is what category I would be in if sell, plus I've always only owned the one house at any given time and lived in it 100% of the time , and not a builder or developer etc .. so seems okay otherwise I'd stay another year , and get the right school zone after that as still time for that .. i think the brightline test is really just another name for a capital gains tax daz1968 - 2021-11-05 15:29:00 |
| 19 | daz1968 wrote: it may do as you have bought and sold several times in recent years. IRD may not like that. spead - 2021-11-05 20:02:00 |
| 20 | I rest my case. Good on you for finding out. Intent!. msigg - 2021-11-05 20:02:00 |
| 21 | msigg wrote: Er no, they are passing the home exemption rule, Nothing to do with intent. But I think you actually know that. I hope. sparkychap - 2021-11-05 20:04:00 |
| 22 | sparkychap wrote: daz1968 - 2021-11-06 20:20:00 |
