The Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) legislation passed Thursday, March 28, 2024, officially becoming law.
Key features of the amendments that impact property investment included:
Repeal of existing Bright-Line tests: The current 10-year and 5-year (new build) test will be replaced by a new 2-year test.
The change will come into effect on or after 1 July 2024 with property transactions completed after this date likely to fall under the new 2-year bright-line test.
Simplification of the Main Home Exclusion: This would apply if land was predominantly used as the main home during most of the ownership period.
Extension of Rollover Relief: between associated persons, provided they have been associated for at least two years prior to the transfer. This aims to defer taxation for specific property transfers, such as those involving family or closely related entities.
Removal of depreciation on Commercial buildings: current 2% diminishing value or 1.5% straight line commercial building depreciation will be removed from 1 April 2024.
With depreciation now set to 0% government revenue is estimated to increase $2.31 billion. Its impact may increase commercial rents.
Reference: Inland Revenue
