WELLINGTON: New Zealand's Finance Minister Grant Robertson said on Monday that the government would soon move to extend the so-called bright line test to five years from the current two as it seeks to crack down on speculators in the housing market.
That would require income tax to be paid on any gains from residential property that is disposed of within five years of acquisition rather than within two years as at present, subject to some exceptions.
It also aims to curb the use of negative gearing so that people will no longer be able to use tax losses on their rental properties to offset their tax on other income.
Labour campaigned on a promise to tackle what it has called a "housing crisis." House prices have risen more than 50 percent nationally over the past 10 years, and almost doubled in Auckland, New Zealand's largest city, pricing many New Zealanders out of the housing ladder.
The government said in October that a ban on foreigners buying existing homes would begin in early 2018.
"We have already begun work on addressing demand-side pressures with the introduction of the ban on overseas speculators buying residential property," Robertson said in a speech to the Auckland Chamber of Commerce. "We will shortly move to extend the bright line test to five years and crack down on the use of negative gearing."
House prices have already started to cool as the economy has slowed and after loan-to-value ratio restrictions were stepped up last year.
The central bank said in November it would undertake a "modest easing" of those home loan restrictions from January, adding that it expected the new government's housing policies to further dampen the market.
"The Acting Reserve Bank Governor recently acknowledged that our programme of work had in part already given him the confidence to start relaxing Loan-to-Value Ratio restrictions," Robertson said.
"We understand our responsibilities. We need to do this work to fix the housing crisis."
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