Flipping houses is about to become a bit more difficult

Drive 15/02/2018

Listen to the full interview with Stuart Nash above. 

Revenue Minister Stuart Nash has confirmed the bright-line test on residential property sales will be extended from two years to five years.

The extension means that profits on properties now bought and sold within five years will be taxable (other than the family home).

Mr Nash joined Stephen McIvor on Drive to explain why this measure is needed.

“I believe if you’re flipping properties and making a profit on those, you should pay tax on that,” he told RadioLIVE.

Mr Nash says the current two years is simply not long enough and has made no real difference.

Mr Nash explained that the measure is intended to “cool the market down and make housing more affordable for Kiwis.”

An "unnecessary" tax on rental properties

Listen to the full interview with Andrew King above. 

Andrew King from the Property Investors Federation disagreed, describing the extension as “unnecessary”.

Mr King assured RadioLIVE that his organisation advises long-term property investments, rather than simply flipping a house within a few years.

But the bright-light test extension may have unintended consequences, Mr King said, particularly for special circumstances like losing a job or getting seriously ill. If a person wanted to sell their property within five years under those circumstances, they now will pay more tax than before.

I just think it’s unnecessary.

“It probably will dissuade people from actually investing in rental property,” he said.

“And that will be a great shame because we actually need more rental properties at the moment.”

Mr King told RadioLIVE that this extension is essentially turning into a tax on rental property. 

Drive with Stephen McIvor, 3pm - 6pm Weekdays and streaming live on 'rova' channel 9 - available on Android and iPhone.