How much is a CGT in NZ?

New Zealand does not have a general capital gains tax. Instead, some residential property sales can be taxed under the bright-line test. If you sell a residential property within 2 years of buying it, the gain may be taxed as income at your marginal tax rate. Labour has proposed a 28% CGT from July 2027, if they win the election. It is not yet law.

The simplest way to avoid tax under the bright-line test is to wait. Sell the property more than 2 years after your bright-line start date, or to qualify for an exclusion such as the main home exemption.

How long do you have to live in a house to avoid CGT?

There is no set minimum number of months or years. To qualify for the main home exclusion, the property generally needs to have been used as your main home for more than 50% of the time you owned it. Also, more than 50% of the property’s area must have been used as your home.

Tax

8 min read25 Jun 2026

Does NZ have a capital gains tax? [2026]

Understand New Zealand's capital gains tax rules. Learn what’s taxed, what’s not, and how it affects you.

Author: Andrew Nicol

Founder, 20+ Years' Experience Investing In Property, Author & Host

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Reviewed by: Ed McKnight

Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.

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New Zealand has no formal Capital Gains Tax (CGT).

But we do sometimes tax capital gains from residential property. This is primarily through the bright-line test (currently 2 years)

However, Labour has proposed a 28% CGT from July 2027. If they win the November 2026 general election, this could become law. However, it is not the law today.

This news has reignited debate about a potential Capital Gains Tax among investors and everyday Kiwis.

In this article, you'll learn what a Capital Gains Tax is and how it could affect property investors.

Do you have a question or comment about Capital Gains Tax? Feel free to leave your thoughts in the comment section at the end of the page.

Top takeaway

New Zealand doesn't have a general Capital Gains Tax. But some property gains are already taxed, and the rules could change after the 2026 election.

What is a Capital Gains Tax?

A capital gains tax is a payment you make to the government when you sell an asset for more than you bought it for.

Right now, Kiwis can make lots of money in capital gains. But, without a CGT, almost none of it is taxed.

Let’s say you bought a single share in Apple Inc (a technology company) at the end of 2010.

At that point, you would have paid about $16.

Ten years later, that share would have been worth about $182.

In this case, your asset (the share in the company) has increased in value by $166.

That difference in value is a capital gain. It’s also sometimes known as capital growth.

Put simply, you can buy assets, sell them later at a profit and keep 100% of the money you make. This is very different from income, where every dollar is taxed.

If there were a capital gains tax, you'd have to pay the government a part of that gain once you sell the share.

If a capital gains tax was 15%, you’d pay $24.90 to the government in this example.

It’s important to note that a Capital Gains Tax is separate from a wealth tax.

You pay a capital gains tax when you sell an asset (and make a profit). But with a wealth tax, you pay the government a part of your wealth every year.

What is Labour proposing at the NZ 2026 general election?

According to Labour’s policy proposal, gains made after 1st of July 2027 would be taxed at 28% if their policy became law.

Now, this isn’t a full-blown capital gains tax on everything you own and all your assets.

Your own home wouldn’t be taxed. Your shares won’t be taxed. And if you inherit a property from Nana, the gains she made wouldn’t be taxed either.

But all investment properties, holiday homes and baches would be fair game.

Here’s how it would look in practice:

You buy a property for $500,000 in July 2027
You sell it 10 years later for $1 million
That’s a $500,000 profit
You keep $360,000, and the IRD takes $140,000 (28%)

This policy would not apply retrospectively.

Let’s say you bought a property 10 years ago and have made $400,000 in capital gains so far.

Those gains aren’t taxed.

But in July 2027 your property is worth $700,000. You hold onto it for 10 more years, and you sell it for $1 million.

That extra $300,000 gain (that you made after July 2027), that’s what the IRD would take a 28% slice of.

Labour says the money would be ring-fenced for healthcare. That way, every Kiwi would get three free GP visits per year.

What about other assets?

Labour’s proposed Capital Gains Tax won't tax profits on all assets. It's aimed at investment property, ignoring other assets like shares.

That said, some of these assets can still be taxed under existing rules.

Asset	Taxed now in NZ?
KiwiSaver, Managed funds, all other funds.	No tax on Capital Gains. Any income you make is taxed at PIE rates (10.50%, 17.50% and 28%)
NZ Shares	Usually no tax on gains for ordinary investors.
Foreign shares	Sometimes yes, under the Foreign Investment Fund rules.
Crypto-currencies	Gains are treated as income, according to the IRD, so you must pay tax.
Trade Me / online selling	Yes, if you’re in business or buying to resell for profit
Selling other appreciating assets (e.g. Art)	Usually no, unless you’re in the business of buying and selling them.

What is the bright-line test?

New Zealand still taxes capital gains from residential property, even though we don’t have a formal CGT. It’s called the bright-line test.

According to Inland Revenue, the bright-line test applies to residential properties sold within 2 years. The clock starts from the date you bought the property.

There are some exceptions to the 2-year rule. For instance, if you are a property trader, you may be tainted. That means that you generally need to hold the property for 10 years or more before you can sell without paying tax on your capital gains.

John Key’s National government introduced this in 2015. While the bright-line test has been changed a few times since, the rules have broadly been reverted back to what they originally were in 2015.

Labour has confirmed a new Capital Gains Tax would replace bright-line test rules.

More from Opes:

How is bright-line test tax calculated?

If the bright-line test applies, any profit you make on the sale of a property is taxed as income. But not at a special rate.

Instead, you pay tax at your marginal income tax rate.

Let’s say you bought a property for $600,000 in August 2024 and sold it for $800,000 in February 2026. On paper, that looks like a $200,000 gain.

But not all of the gain is taxable. You may deduct relevant expenses.

For instance, if you spent $40,000 on buying and selling costs, such as legal fees, agent’s commission, and other transaction costs, that would reduce your taxable profit to $160,000.

If your other income already puts you in the 33% tax bracket, the tax would be:

$160,000 × 33% = $52,800

So in this example, you’d pay $52,800 in tax to the IRD.

Sale price	$800,000
Purchase price	$600,000
Renovation costs	$0
Estimated sales costs (e.g. real estate agent)	$40,000
Estimated gain	$160,000
Tax rate (%)	33%
Tax to pay	$52,800

You also need to include the sale in your tax return and complete an IR833 bright-line property sale form.

Use our bright-line test calculator to estimate whether you’re caught by the rule and what tax you might pay.

What is the intention test?

Generally, property investors do not pay tax on their capital gains. Their primary way of earning income is through the rent.

However, if you bought the property with the intention of selling it – any gain on sale can be taxed as income under the intention test

What matters is your intention when you bought the property. Not whether you decided to sell it later on.

If your intention was to buy a property and sell it later for a profit, then you pay tax on those gains. If you didn’t have that intention, then you don’t need to pay tax on your gains.

Most investors don't pay tax on their capital gains because they genuinely buy to hold for the long term and earn rental income – not to resell.

And because intention is subjective, IRD weighs up objective signs like how long you held the property and your history of buying and selling (this is all separate from the bright-line test).

What are the pros and cons of a capital gains tax?

Most of the debate comes down to 2 big arguments on each side.

Pros	Cons
It may increase housing affordability	It won’t slow house price growth down
It increases fairness in the tax system	People who have to pay CGT often already pay most of the tax

The case for it: supporters say a CGT could make housing a bit more affordable and make the tax system fairer.

The case against it: critics say it won’t actually stop house prices rising, and the people who’d pay it already shoulder most of the tax burden.

A capital gains tax could make housing a bit more affordable.

The logic is that if property investors make less money, fewer people may rush into the market.

That could take some heat out of house prices and make it easier for first-home buyers to compete.

It could also make the tax system feel fairer.

Right now, someone can make an $800,000 gain on an investment property and pay no tax on that gain. Compare that to someone who earns $80,000 in wages and pays tax on every dollar they earn. To a lot of people, that feels backwards.

But realistically, a Capital Gains Tax probably wouldn’t stop house prices from rising.

Countries with CGTs still saw strong house price growth. Since their taxes were introduced, house prices have risen (up until 2025):

Australia: 6.5% a year since 1985
UK: 8%+ a year since 1965
Canada: 6.7% a year since 1972
US: 5.4% a year since the 1970s

The other con is that the people most likely to pay a CGT already pay most of the tax.

Some lower-income households get back more through benefits and tax credits than they pay in tax.

So critics say a CGT would just hit the same group that already carries most of the tax burden.

Top tools you can use

Bright-line Test Calculator – https://www.opespartners.co.nz/calculators-all
Property Investment Calculator – https://www.opespartners.co.nz/calculators-all
Can I afford an investment property? (find out in <2 mins) – https://www.opespartners.co.nz/calculators-all

Should investors worry about Labour's CGT?

Investors shouldn’t make long-term decisions based on a policy that isn’t law. And a broad-based Capital Gains Tax doesn’t exist within New Zealand.

But if Labour wins the next election, it's likely to be back on the table.

This news will make some people nervous, and maybe derail some plans.

You’ve got to base your decision on what the tax settings are today. Not necessarily what they could be in the future.

What matters most is understanding the rules as they stand today, and how any future change could affect your numbers.

The reality is that a major political party is proposing a capital gains tax ... a policy that we’ve been debating as a country since 1973.

Do I want to pay capital gains tax? No. But if I have to, it’s just another cost of doing business.

You don’t say “I’m not going to get a job” because you have to pay income tax.

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Andrew Nicol

Founder, 20+ Years' Experience Investing In Property, Author & Host

Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.

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Ok, now for the legal bit:

This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.

We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.

You might like to use us or another financial adviser

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