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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by Simon Mullinger • 4 November 2025
Family trusts are misunderstood. They masquerade as financial planning vehicles exclusively for the fabulously rich, however, they are just as relevant for everyday working people. Weston Ward and Lascelles’ family trust lawyers in Christchurch advise a diverse range of people in ways to protect their family’s financial future. Whether you're a business owner, property investor, or simply someone who wants to ensure your loved ones are protected, understanding the advantages of a family trust is essential. Afterall, a family trust is one of the most powerful legal structures available providing families with peace of mind for generations to come. Here are ten reasons why you should consider establishing one: 1. To keep assets in the family This is the most common reason why people set up a family trust: to pass on family assets to the next generation. Certain assets such as a holiday home or farm, hold great sentimental value that goes beyond monetary value, and a New Zealand property trust protects these assets. Under a trust structure, after your death the asset remains in the family as it is owned by the trust entity. Without a trust in place, there are typically two options: If you bequeath the property in your Will, it may need to be sold to divide and share proceeds among beneficiaries. If you take the fractured ownership route, the asset is at risk of becoming unworkable in the future should relationships breakdown.