This has now happened: the change to the law has now been passed in Parliament. It received royal assent just last month on the 29th of March 2018 so is now law.
A key point of the new law is that the ‘bright-line’ test has been extended from two to five years. The bright-line extension is supposedly going to help to deter property speculators, and cool off the housing market. In brief, the bright-line test refers to whether or not you have to pay tax on the gains from your residential property sale. Previously you could in many situations (even if you didn’t know) be made to pay tax if you bought and sold a property within two years. This extension means you can now have to pay tax if you buy and sell a property within five years (again, on certain conditions). The situation however is much more complicated than it seems and there are many exceptions and technicalities to consider.
If you were wondering about the term “bright-line” this was just a common jargon term which the politicians found convenient to pick up and use as a label to identify the fact that these tax laws were tied to a definite and particular boundary line to divide between what is taxable and what is not. (The tax laws are full of other boundary lines).
Come in and talk to us if you are thinking of buying or selling property and we will help you quickly and easily navigate the minefields.