Buy and hold

Buy and hold is the strategy of purchasing property to retain long term, generating rental income and benefiting from capital growth over time, rather than selling for a short-term profit.

Why it dominates in New Zealand

The tax settings favour it. There is no comprehensive capital gains tax, and the bright-line test only applies to sales within two years. A long-held property sold without a resale intention is generally not taxed on the gain.

It also allows compounding to work — see compound interest.

What it requires

• Cashflow that survives rate rises, not just today's rate
• A genuine long-term horizon; the strategy does not work over three years
• Tolerance for market cycles without panic-selling
• Ongoing maintenance and management

Common misunderstanding

"Buy and hold" is not "buy and ignore." Under-renting, deferred maintenance, an unreviewed insurance sum insured, and never refixing on better terms all quietly erode returns over a long hold.

Intent at purchase still matters for tax. Buying with a purpose of resale makes the gain taxable regardless of how long you hold — see capital gain.

Related terms

Last reviewed: 1 August 2026 · General information only, not financial advice.

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