Property investors are lobbying the Government to halve the time period of a new capital gains tax for properties bought and sold within two years.

The Finance and Expenditure Committee met in Auckland on Wednesday to discuss the first stage of a three-pronged legislative move to cool the housing market.

The focus was meant to be on the Taxation (Land Information and Offshore Persons Information) Bill, which will gather information on local and foreign property buyers.

However, much of the discussion was taken over by the "bright line" capital gains tax, which will be collected based on the information gathered.

New Zealand Property Investors' Federation executive officer Andrew King said several commentators had called for a threshold of four or five years.

"We implore you not to do that," he told the committee," King said.

"What we'd like to see is the two-year test reduced to something like a year."

We agree with having good information ... to find out if there is actually a problem."

The Labour Party ruffled feathers over the weekend after suggesting that overseas-based Chinese buyers were increasingly purchasing Auckland property.

Its assertion was based on analysing the surnames of a list of buyers leaked from a single real estate company, methodology which has been roundly criticised.

More accurate data is expected to become available from October, after the bill passes into law.

The bill requires buyers and sellers of property to provide their Inland Revenue Department numbers at the time of transfer, and tax numbers for those who are residents in other countries.

Overseas buyers will also need a New Zealand bank account to get an IRD number.

The bright line test will not apply to the family home, estate sales or properties sold as part of a relationship property settlement.

Chartered Accountants Australia and New Zealand's tax NZ leader Peter Vial the main home exemption should be reconsidered.

"There will be uncertainty as to how it applies," he said.

"The key thing for us is that the rules are kept as simple and clear as possible."

Many people would have more than one main home, while another submitter raised the question of how baches would be treated.

Vial supported the legislation overall, but said it was important that the rules were monitored and reviewed on an ongoing basis.

The bill is expected to be reported back to the House in time to be passed in late September and come into force from October 1.

King said tenants would ultimately pay the price for more extensive capital gains taxes, with rents likely to increase.

However, he welcomed the information-gathering measures of the actual bill under discussion.

"We don't represent traders or speculators. We don't see our members as being affected by this bill," he said.