The National Party will return the bright-line test to two years if elected in 2020, leader Simon Bridges says.
The Taxation (Bright-line Test for Residential Land) Bill was passed in 2015, and required income tax to be paid on any gains from residential property that was sold within two years of purchase, excluding the family home or inherited property.
It may be a surprise to some it was introduced by National, which has come out strong against the Tax Working Group's (TWG) February report recommending a broad capital gains tax.
- Landlords unhappy with brightline test extension
- Tax Working Group recommends capital gains tax
- Property capital gains tax already fair - Simon Bridges
Mr Bridges told Newshub Nation on Saturday National would repeal any CGT the Government chooses to implement, and the party would not introduce any more taxes in its first term of governing.
And speaking to The AM Show on Monday he doubled down, saying National would not only repeal a CGT but also return the bright-line test to two years.
The TWG's recommended CGT would also exclude the family home and inherited property, but would apply to all gains and losses on land improvements, including shares and business assets. It would not apply to personal items, such as bikes, boats and art.
Asked if he would return the bright-line test to two years, Mr Bridges said: "If you want me to make a decision on the spot, it would be: we would repeal that as well [as a CGT], but we haven't formally signed that off."
National's two-year bright-line was increased last year by the current coalition Government to five years. The extension sparked some outrage among investors, with the Property Investors Federation saying it would reduce housing availability.
But Revenue Minister Stuart Nash defended the move, saying it would reduce speculative demand and also help improve housing affordability for owner-occupiers.
Asked why he wouldn't just abolish the bright-line test altogether, Mr Bridges acknowledged that there is a need for it, because of "Flash Harrys who are definitely intending on speculating and flipping their properties quickly - we don't need to see that".
He criticised the TWG's overall approach to CGT.
"Don't worry about a bright-line test, you sell anywhere, anytime, it doesn't matter what your intention is, you're getting a capital gains tax - that's terrible."
The TWG officially recommended the Government introduce a CGT in its report, along with other recommendations including reducing KiwiSaver and personal income taxes, and increasing taxes around protecting the environment.