The so-called bright-line test for residential property sales will catch about 3000 speculators when it's extended to five years, Revenue Minister Stuart Nash says.

He's going to use a bill that's already going through parliament to fast track the extension and expects it to be in force some time next month.

It will mean income tax has to be paid on profits gained from buying a house and then selling it within five years.

At present it's two years.

"It will catch speculators, people who are making a gain on a house they buy and flip," Mr Nash said.

"About 3000 speculators will be brought into the tax system and it will raise about $50 million."

Housing Minister Phil Twyford said the two-year law had very little effect.

"Most speculators would hold on to a house for two years and one day," he said.

"What this move is going to do is bring some stability to the housing market, this is going to quieten things down a bit.

"It will stop us getting into the situation where speculation mania pushes prices sky high."

Mr Nash will amend a routine tax bill to make the change, which has been previously announced.

The extension will apply to residential properties purchased from the date the bill becomes law, which he expects will be in March.