Property Investors: Is the future bright?

31 May 2021

After the global pandemic of 2020, 2021 was always likely to be a financial challenge for many. What wasn’t so predictable was the Government to announce changes to the Brightline Test and Interest Deductibility. The rules have been introduced to help first home buyers and people on lower incomes.


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What is the Brightline Test NZ?

The Brightline Test treats any financial gain made on the sale of a residential property that was not a family home, a main home held in a trust, or a residential property that is inherited as taxable income.


The time span of the Brightline Test has changed over the years:


  • Within two years of being acquired, between 1 October 2015 and 28 March 2018 inclusive
  • Within five years of a house being acquired on or after 29 March 2018 The most recent update:
  • Within ten years of a house acquired on or after 27 March 2021


How will the new property rules affect me?

The new property rules include:


a) Extending the Brightline Test (tax on capital gain) from the current 5 years to 10 years.


The extension of the Brightline Test may have your attention as the greatest cause for concern; however, most people invest in property as a long-term commitment, so an additional 5 years is not typically a big issue.


b) Removing the ability to deduct mortgage interest in your annual tax return.


Losing the ability to deduct mortgage interest should be where you focus your attention, and the reason why seeking professional property legal advice is prudent.


Many clients have bank loans secured against their family home and use the equity to buy a rental property. If initially structured correctly, the surplus rental income provides a passive income, but it’s the increase in value over time that is the biggest draw – a tool to build one’s personal wealth. However, the loss of deductibility of the interest is essentially a tax on the debt and the interest rate, and a threat to cashflow.


What can I do to protect my finances?

Firstly, don’t panic. The loss of interest deduction is being phased in over four years, so there is time to improve your position. To learn more about how you can protect your greatest assets, contact Weston Ward & Lascelles Christchurch property lawyers on 03 379 1740 for all your property needs or contact us here.

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Planning a family holiday should be an exciting time filled with anticipation and joy. However, for separated or divorced parents, the prospect of taking children overseas can quickly become a complex legal maze fraught with uncertainty and potential conflict. Child abduction is when one parent takes a child overseas without one of the parent’s express agreement , it’s a serious scenario with potentially long-term consequences. Understanding your rights and obligations under New Zealand law is crucial to ensuring your holiday plans don't turn into a legal nightmare. The legal framework: your obligations under New Zealand law When parents separate or divorce, the legal landscape around children's travel changes significantly. Under the Care of Children Act 2004, both parents typically retain guardianship rights unless a Court Order states otherwise. This means that major decisions affecting a child's welfare, including international travel, require careful consideration of both parents' rights. The fundamental principle governing family law in Christchurch and throughout New Zealand is that the children's best interests must always come first. This legal framework creates specific obligations for parents planning overseas travel, regardless of who has day-to-day care of the children. Do you need permission from the other parent? The short answer is: yes, in most cases but it depends on your specific circumstances. If you share legal guardianship or parental responsibility with your ex-partner (which is the default position unless varied by a Court Order), you generally need their consent before taking children overseas. Note: this requirement exists even if you have primary care of the children or if they live with you most of the time. Several factors influence whether you need explicit permission: 
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