New builds and the bright-line test: the old 5-year rule

For residential property sold on or after 1 July 2024, there is no separate new build rule. Every property, new or old, uses the same 2-year bright-line test. The 5-year new build period only ever applied to property acquired on or after 27 March 2021 and sold before 1 July 2024, and even then, as Inland Revenue now points out, it rarely changed the answer. What remains for new builds today is a main home rule: the construction period is ignored when testing whether the property was your main home.

The short answer

This guide is general information, not tax advice. If you are reviewing an older sale, check with your accountant for your situation. Rules checked 10 November 2026 against Inland Revenue's guides IR1229 (sales on or after 1 July 2024, March 2026) and IR1227 (sales before 1 July 2024).

Which rules apply depends first on the date you sold, meaning the date you signed a binding sale and purchase agreement (the bright-line end date):

• Sale agreement on or after 1 July 2024: the 2-year test applies to everything. Whether the house was new is irrelevant to the period.
• Sale agreement before 1 July 2024: the period depends on when you acquired the property, and for acquisitions on or after 27 March 2021, on whether it was a qualifying new build.

IR1227 (p7) puts it simply: since the 1 July 2024 change, "you no longer have to separate out new builds from all other properties". Our bright-line history guide covers how the periods changed over time.

The periods before 1 July 2024

For sales before 1 July 2024, IR1227 (p6) sets the bright-line period by acquisition date. The acquisition date is usually the date of the binding agreement to buy, even if conditions such as finance were still outstanding.

One transitional rule matters at the 2021 boundary. A property acquired on or after 27 March 2021 is treated as acquired before that date if the buyer made an offer on or before 23 March 2021 that could not be revoked or withdrawn before 27 March 2021, for example by tender (IR1227 p7). That puts it in the 5-year group whether or not it was a new build.

The period runs from the bright-line start date, which for a standard purchase is the date the title is registered to you, usually settlement. The bright-line dates guide explains all three dates.

What counted as a new build

The definition of a qualifying new build is the one part of this topic we could not confirm on a current Inland Revenue page. IRD's page "Qualifying for the 5-year bright-line period for new builds" returned an error when we tried to read it, and IR1227 (November 2026) does not set out the test. The description below comes from a search summary of that IRD page, so treat it as unverified:

• the dwelling must be self-contained;
• it must have a code compliance certificate (CCC) issued on or after 27 March 2020; and
• you either added the dwelling to your land yourself, with the CCC issued before you sold, or you acquired it no later than 12 months after the CCC was issued.

Where one title held both a new build and an older dwelling, the summary says the new build portion took the 5-year period and the rest took 10 years.

A flag on the CCC date. Inland Revenue's 2021 policy summary sheet on new builds proposed 27 March 2021 as the CCC date, not 27 March 2020. The final date should be checked against the legislation or the relevant Tax Information Bulletin before you rely on it. For any sale where this matters, which is only a sale before 1 July 2024, confirm the date with your accountant or from the legislation directly.

Why the new build rule rarely changed the answer

Here is the surprising part. The new build rule only applied to property acquired on or after 27 March 2021, and only to sales before 1 July 2024. That window is just over three years long. Any such property was held for less than 5 years when sold, so it was inside the 5-year new build period and inside the 10-year standard period. The bright-line test applied either way.

IR1227 (p7) states the result directly: for a sale before 1 July 2024, "your property sale will come under the bright-line test if you acquired the property on or after 29 March 2018 and you are selling it within 5 years or before 1 July 2024 (whichever comes first)".

The main home rules were also the same for both groups. For property acquired on or after 27 March 2021 and sold before 1 July 2024, the main home exclusion needed more than 50% of the land used as your main home for the whole period, with non-main-home gaps of 12 months or less treated as main home days, and otherwise the gain was apportioned (IR1227 pp16 and 25 to 38). That applied to new builds and other property alike.

Worked example: one townhouse, three sale dates

Say you sign to buy a newly finished townhouse on 10 May 2022, within 12 months of its CCC, for $650,000, and the title is registered to you on 1 June 2022. You rent it out. You sell for $700,000 with $14,000 of selling costs, and you earn $70,000 a year. A second case is a similar new townhouse bought later, with the title registered on 1 June 2025.

The first row shows the point: calling the townhouse a new build changed the length of the period, but not the result. The 2024/25 tax year used composite rates (IRD's tax rates page), which is why the first figure differs slightly from the third. In 2026/27, $8,100 of the profit is taxed at 30% and $27,900 at 33%. The second row is IRD's Mia point (IR1229 p7): once the sale date is on or after 1 July 2024, only the 2-year test matters, however recently the property was bought under the old rules.

What still matters for new builds today

For sales on or after 1 July 2024, new builds have no special period, but three rules still come up often.

The construction period is ignored for the main home test

When you build a new home, you ignore the construction period, including design, when testing whether you used the property as your main home for more than 50% of the bright-line period. Construction is usually treated as complete when the CCC is issued (IR1229 p22; IR1227 p23). IRD's Amelia example shows the arithmetic: of 272 days in her bright-line period, 142 were construction, leaving 130 test days. She lived there for 24 of them, or 18%, so the exclusion did not apply. Our main home test calculator takes a construction period as an input.

Off the plans: the start date is the agreement

If you buy off the plans, before the title exists, the bright-line period starts on the date you sign the agreement to buy, not when the title is registered (IR1229 p11). In IRD's Denise example, a contract to buy off the plans on 2 July 2023 and a contract to sell on 1 September 2024 fall within 2 years, so the profit is taxable. A long build can therefore use up much of the 2 years before you get the keys.

Off the plans and moving in

IRD's Josh example (IR1229 p22) combines the two rules. Josh signs off the plans on 1 December 2023, construction finishes on 2 June 2025, and he moves in on settlement the next day. He sells on 4 December 2025. Because the construction period is ignored, his main home use after completion is what counts, and the main home exclusion applies.

See our main home exclusion guide for the full test, and the bright-line end date calculator to find the anniversary for an off-the-plans start date.

When the old rule still comes up

The 5-year new build rule is now mainly a question about the past. It can come up when:

• you are checking how a sale signed before 1 July 2024 should have been treated, or answering a question about it from Inland Revenue;
• a property was acquired on or after 27 March 2021 with a mix of new and older dwellings on one title, where the 5-year and 10-year portions differed; or
• you read older articles that still describe a 10-year test with a 5-year new build exception. For any sale signed today, that is out of date.

For an older sale, the IR1227 guide is the one to use. Our bright-line calculator handles pre-1 July 2024 sales: enter your purchase agreement date and tick "new build" under special cases, and it applies the period and the 2021 main home apportionment rules. It cannot confirm whether a dwelling met the new build definition, which is the unverified part above.

If an older sale was taxable, the profit was taxed at your marginal rates in the year of settlement, like any other bright-line income. Our guides to how the gain is taxed and deductible costs apply to old and new sales alike.

Questions people ask

Is there still a 5-year bright-line period for new builds?

No. For sale agreements on or after 1 July 2024, every residential property uses the 2-year test. The 5-year new build period applied only to property acquired on or after 27 March 2021 and sold before 1 July 2024.

What counted as a qualifying new build?

According to a search summary of an IRD page we could not open, a self-contained dwelling with a code compliance certificate issued on or after 27 March 2020, which you added to your land or acquired within 12 months of the CCC. That CCC date is unverified: a 2021 IRD policy summary proposed 27 March 2021.

Does building a new home affect the main home exclusion?

Yes, in your favour. The construction period, including design, is ignored when testing whether the property was your main home for more than 50% of the bright-line period. Construction usually ends when the CCC is issued.

When does the bright-line period start for an off-the-plans purchase?

On the date you sign the agreement to buy, not when the title is later registered to you. IRD's Denise example shows a sale caught because it fell within 2 years of the off-the-plans agreement.