A buyer bought a house meaning to live in it, but a job offer overseas meant she never moved in. She rented it out and sold it 18 months after title transferred. Does the main home exclusion apply?
Correct Answer
D) No; intending to live there is not enough without actual main-home use.
Inland Revenue states that having the intention to use a property as a main home is not enough; the owner must actually have used it for that purpose. For sales from 1 July 2024 the owner must have lived there as their main home for more than 50% of the bright-line period. She never lived there, so the profit is taxable under the 2-year test.
Why This Is the Correct Answer
The exclusion depends on actual use, and she never lived in the property.
Why the Other Options Are Wrong
Option A: Yes; her intention at purchase decides whether the property was her main home.
Inland Revenue says intention is not enough; the property must actually have been used as the main home.
Option B: Yes; the exclusion applies automatically when the owner has no other home.
Owning no other home does not satisfy the requirement to have actually lived there as a main home.
Option C: No; the exclusion can be claimed only by someone who has owned the home for over 2 years.
The exclusion is about use during the bright-line period, not a minimum period of ownership.
Background Knowledge for Finance
Source: https://www.ird.govt.nz/property/buying-and-selling/when-you-need-to-pay/the-brightline-test/exclusions-to-the-brightline-test
Exam Tip for Finance
Main home exclusion = actual occupation, not plans.
Common Mistakes to Avoid on Finance Questions
- β’Relying on the owner's intention at purchase.
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