Significant changes to the bright-line rules earlier this month saw the test revert to a 2-year test.

In addition to the test period, several other changes were made including in relation to the criteria for the main home exclusion.

For properties with a bright-line end date after 1 July 2024, the rules relating to the main home exclusion largely revert to the original exclusion (introduced in 2015) – gains will not be subject to bright-line if the property has been used predominantly as the person’s main home for most of the time the person owned the land (or the relevant criteria are satisfied if the property is owned by a trust).

Another change relates to how construction periods are treated for the purposes of the exclusion. The construction period of a dwelling is ignored when determining whether the property has been used for most of the bright-line period predominantly as the main home.

The rules that applied prior to the recent changes contained a requirement that the construction period was for “a reasonable period”. That further requirement is no longer present in the new main home exclusion that applies from 1 July 2024.

For more details in relation to the bright-line rule changes, join us for our Special Edition Webinar: The new Brightline on 30 August 2024.