Otherwise if you now buy and then sell within 5 years you are caught.
From 29 March 2018, the time-frame of 2 years in the original Bright-line test has been extended to 5 years.
For standard purchases of residential properties, with no complicating factors such as association with a property developers or dealers, the following generally applies:
- For sale and purchase agreements entered before 1 October 2015: Bright-line test does not apply;
- For sale and purchase agreements entered after 1 October 2015 but before 29 March 2018: 2-year Bright-line test applies
- For sale and purchase agreements entered on or after 29 March 2018: 5-year Bright-line test applies.
Some interesting examples we have come across where people have been caught by surprise:
- Mum and Dad are part owners, but do not live in the house, that proportion of ownership could be liable for tax on any profit when you sell it.
- Change of ownership from individual names to a trust. Could trigger a new start date for the 'Bright-line Test', as effectively we now have new owner.
Always seek advise from your accountant or solicitor.