If you sell your home inside the 2-year bright-line period, the profit is not taxed if you pass two tests: you used more than 50% of the land as your main home, and you lived there as your main home for more than 50% of the bright-line period. For sales agreed on or after 1 July 2024 it is all or nothing: pass both and nothing is taxed, fail either and the whole profit is. It is not available if you have already used it twice in the 2 years before the sale, or have a regular pattern of buying or building and selling homes. Time spent building is ignored.
The two tests
Rules checked 10 November 2026. This is a guide, not tax advice; check with your accountant for your situation.
Inland Revenue's guide IR1229 says you can claim the main home exclusion if you:
- "used more than 50% of the property's area as your main home (including the yard, gardens, and garage)"
- "lived in the property as your main home for more than 50% of the bright-line period."
It then adds: "If either one of these is 50% or less, then the main home exclusion does not apply and you will need to pay tax on any profit when you sell the property." Exactly 50% fails. The bright-line period runs from the day title is registered to you to the day you sign the sale agreement; see bright-line dates.
| Land used as main home | Time as main home | Result |
|---|---|---|
| More than 50% | More than 50% | Excluded in full |
| More than 50% | 50% or less | Whole profit taxable |
| 50% or less | More than 50% | Whole profit taxable |
| 50% or less | 50% or less | Whole profit taxable |
To test your own dates, use the main home test. It counts the days for you.
What counts as your main home
IR1229 says your main home is "the property where you live for most of the time. You cannot have more than 1 main home." If you have more than one property, it is the one you have the greatest connection with, judged by:
- how much time you live in each
- where your immediate family lives
- where your personal belongings are kept
- where your social ties are strongest
- how you use each home
- your other ties to the community, such as work or business.
IRD's example is Lisa, who rents an apartment in Wellington near her work and her son's school, and owns a lake house at Taupō that she uses for 5 weeks over summer and 4 ski weekends. When she sells the lake house it is not her main home, so the exclusion does not apply.
A few more rules from IR1229:
- You must actually live there. "Having the intention to use the property as your main home is not enough."
- Family members do not count. The exclusion does not apply when only a family member, not you, lived there.
- Flatmates are generally fine. Renting a room to a flatmate does not usually stop the exclusion. Renting out a separate part of the land is different; see renting part of your home.
- Short breaks are fine. Use need not be continuous. You can rent it out while on holiday or before settlement, as long as total main home time is more than total other time.
The land test: more than 50% of the area
The area test looks at the whole property, "including the yard, gardens and garage." It mostly matters where part of the land is rented out, run as a business or used for something else.
IRD's example is Mele, who owns a 600 square metre property with a house of 500 square metres and a fenced-off flat of 100 square metres. She lives in the flat and rents out the house. Her main home is about 17% of the area, so the exclusion does not apply.
The reverse is Pinky, who bought a country store with living quarters in February 2024. Her retail business uses 45% of the property and she lives in the rest. The business premises exclusion does not apply, because the land is not used predominantly for the business. But the main home exclusion does: she uses 55% of the land as her main home and lived there for 55% of the bright-line period.
If you already claim a share of rates and insurance against rental or business income, the area split you used there is a good starting point.
The time test, with IRD's examples
The time test compares the days you lived in the property as your main home with the total days in the bright-line period. IR1229's examples, which this site's engine reproduces:
| IRD example | Bright-line period | Days lived there | Share | Result |
|---|---|---|---|---|
| Mel: lived in about a year, then rented | 590 days | 381 | 65% | Excluded |
| Ari: lived in about 8 months, then rented | 590 days | 259 | 44% | Taxable |
| Kate: lived in 14 months, rented 4 | About 18 months | 14 months | More than 50% | Excluded |
Our engine counts both the first and last day, as most IRD examples do, so it gives Mel 382 of 591 days. IRD's Mel example counts one fewer of each. The result is the same either way, but if your share is close to 50%, the counting method matters and is worth checking with your accountant.
Worked example: all or nothing
Say title to a house is registered to you on 3 February 2025 and you move in that day. Later you move out and rent it, and on 20 November 2026 you sign a sale agreement, settling on 18 December 2026. The bright-line period is 656 days. You paid $820,000 plus $2,500 of legal fees, sell for $905,000 with $24,500 of selling costs, and your other income for 2026/27 is $95,000. Two versions, through this site's engine:
| Move out 1 December 2025 | Move out 15 January 2026 | |
|---|---|---|
| Days as main home | 302 of 656 | 347 of 656 |
| Share of the period | 46.0% | 52.9% |
| Main home exclusion | Fails | Applies in full |
| Bright-line profit | $58,000 | $58,000 |
| Taxable | $58,000 | $0 |
| Extra tax for 2026/27 | $19,140.00 | $0.00 |
Six weeks of living there makes a $19,140.00 difference. There is no partial credit for the 46%: under the current rules, "If either one of these is 50% or less," the exclusion does not apply at all. That is why it pays to count the days before you sign.
The limits: twice in 2 years and a regular pattern
Even if you pass both tests, IR1229 says the exclusion does not apply when you:
- "have a regular pattern of either buying and selling or building and selling your main home (even if you live in the property before it is sold)"
- "have already used the main home exclusion twice over the 2-year period immediately before you sold."
Twice in 2 years. IRD's example is Emma, who lived in each of three homes for the whole of each bright-line period. She used the exclusion on sales agreed on 7 November 2023 and 9 June 2024. When she agreed to sell the third home on 15 July 2025, both earlier uses fell within the 2 years before, so the third sale is taxable. Our engine counts the same two prior uses.
Regular pattern. There is no fixed number. IR1229 says determining a regular pattern "can be complex" and recommends advice if you have bought and sold several properties. IRD's detailed view is in its item QB 25/09.
Two homes at once is allowed, one period each. IRD's Amy bought a Napier home in February 2025, bought a bigger one in October 2025 and moved in, then sold both on 31 December 2025 after a job move. Each was her main home for most of its own period, so both sales are excluded.
Building a home: the construction period is ignored
When you build a new home, IR1229 says "you can ignore the construction period when determining if your usage of the property qualifies for the main home exclusion." Construction includes the design phase and is usually complete when the code compliance certificate is issued.
IRD's example is Amelia. Title to a bare section registered on 18 December 2024, design began on 20 January 2025 and construction finished on 10 June 2025. She lived there from 11 June to 4 July 2025 and signed to sell on 15 September 2025. Of 272 days, 142 were construction, leaving 130 to test. She lived there 24 of them, about 18%, so the exclusion does not apply.
Josh shows the other side: he bought off the plans on 1 December 2023, the build ran late to 2 June 2025, and he lived there from settlement on 3 June 2025 until his sale agreement on 4 December 2025. Ignoring construction, he lived there the whole time, so he is excluded. Our new builds guide has more.
Trusts, co-owners and rollover
- Co-owners can have different main homes. Only the owner who did not live there is taxed, on their share: equally for joint tenants, by share for tenants in common.
- Trusts can use the exclusion if the property was a beneficiary's main home and either the principal settlor has no main home, or it is the principal settlor's main home. If the principal settlor's main home is elsewhere, no trust property qualifies.
- Rollover relief carries main home use across: time the previous owner used it as their main home is attributed to you. See rollover relief and selling after separation.
Apportionment: only for the old regime
There is no apportionment for sales agreed on or after 1 July 2024. It exists only for property acquired on or after 27 March 2021 and sold before 1 July 2024. For that group, IR1227 gave a full exclusion only with more than 50% of the land as your main home for 100% of the period, counting gaps of 12 months or less. Otherwise the sale price and cost are reduced by this fraction:
((non-predominant main home days x main home %) + predominant main home days) / total days
Predominant days are days when more than 50% of the land was your main home; non-predominant days are days when 50% or less was. This site's engine reproduces IR1227's examples:
| IRD example | Facts | Taxable profit |
|---|---|---|
| Zoe | Lived there 761 of 1,096 days; the 335-day gap is under 12 months | Nil: full exclusion |
| Felix | Main home on 30% of the land for all 659 days; sold $1,200,000, cost $1,000,000 | $140,000 |
| Bud | Main home on 30% of the land for 424 of 1,115 days; same prices | $177,184 |
For Bud, the reduced income is $136,897 and the reduced cost $114,081, so the IR833 shows $1,063,103 of sale price and $885,919 of cost. Our history guide explains which sales fall in this group.
Keep records for each year
IR1229 says that to claim the main home exclusion "you must have records to support the claim for each year in the bright-line period," and records must be kept for at least 7 years. Keep whatever shows when you moved in and out and how the land was used, such as tenancy agreements for any rented periods. If you are unsure whether your sale is caught at all, start with the is my gain taxable checker.
Questions people ask
Can I get a partial main home exclusion if I lived there for 40% of the time?
Not for a sale agreed on or after 1 July 2024. The current exclusion is all or nothing, so the whole profit is taxable. Apportionment only applies to property acquired from 27 March 2021 and sold before 1 July 2024.
Does renting my home out for a few months stop the exclusion?
Not on its own. Use need not be continuous, as long as your total main home time is more than half the bright-line period and you used more than half the land.
How many times can I use the main home exclusion?
It does not apply if you have already used it twice in the 2 years immediately before the sale, or if you have a regular pattern of buying or building and selling your main home.
Does the time I spent building count against me?
No. The construction period, including design, is ignored when testing main home use. Construction usually ends when the code compliance certificate is issued.
Sources
- IRD: IR1229 Bright-line property tax, for residential property sold on or after 1 July 2024 (March 2026)
- IRD: IR1227 Bright-line property tax, for residential property sold before 1 July 2024
- IRD: Exclusions to the bright-line test
- IRD: The bright-line property rule (updated 1 April 2026)
Rules as at 10 November 2026. A guide, not tax advice. Spotted something out of date? Email crucibleinvestmentsltd@gmail.com.