There has been talk about methods which need to be implemented to try to remove the heat from the housing market. One idea is to extend the “bright line test” from 5 to 20 years. On RNZ last week somebody wrote in an suggested 50 years…
Most people wonder, what the hell is the “bright line test”? It essentially means that if people buy a second house, and they sell it inside 5 years, then they have to pay tax on the increase in value. It was implemented by the National Party under John Key, and the Labour Party extended it from 2 to 5 years.
I had a chat with a friend on Friday evening who was proposing that it should be implemented for all houses apart from the family home and a holiday house. At the time I agreed. However, when I thought about it, I don’t think there should be any exceptions. If we allowed holiday homes, we would find masses of amazingly expensive homes being built all over the country and being called “holiday homes”.
The “bright line test” should also apply to houses owned by family trusts.
This week this excellent article on the “bright line test” was written by Lian Hehir and have a read: