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Changes in how property is held

Rollover relief allows interest deductions (subject to phasing) after the restructure of the legal ownership of the property and the accompanying loan on or after 27 March 2021.  

Rollover relief will apply for interest limitation purposes when residential property is transferred:

  • under a settlement of relationship property, or
  • as part of a company amalgamation that qualifies as a resident’s restricted amalgamation
  • following the death of the owner of the property, to an executor or administrator of the estate or to a beneficiary of the estate.
  • in some cases to or from look-through companies and partnerships
  • in some cases to or from family trusts

Specific relief also applies for certain transfers of land subject to the Te Ture Whenua Māori Act 1993.

Family trust

Rollover relief applies for transfers of residential property to or from family trusts, provided that:

  • each transferor (in the case of transfers to a trust) or each recipient (in the case of transfers from a trust) of the residential property is also a beneficiary of the trust
  • all principal settlors are beneficiaries of the trust, and
  • each beneficiary is either a principal settlor, has a family connection with a principal settlor, or is a company controlled by a family member beneficiary or is a charity. 

For rollover relief to apply when the trustees of a family trust of the type described above transfer the property back to its original settlors, each recipient’s proportionate interest in the property has to be the same as what they held before they settled the property on the trust.

Different conditions would apply for transfers to a Māori authority (or a person eligible to be a Māori authority) as the trustee of a trust. 

Māori authority or Māori family trust 

Rollover relief would be available for a transfer of residential property to a Māori authority, or person eligible to be a Māori authority, as the trustee of a trust if:
  • the residential property is subject to Te Ture Whenua Māori Act 1993
  • each transferor is a beneficiary of the trust, and
  • the transferors of the residential property and the beneficiaries of the trust are all either:
    • members of the same iwi or hapū, or
    • the descendants of the same tipuna (living or dead).

Rollover relief also applies when the trustees of a trust of the type described above transfer property that is subject to Te Ture Whenua Māori Act 1993 back to the persons who originally settled the property on the trust. This is provided that each recipient’s proportionate interest in the property is the same as what they held before they settled the property on the trust.

Look-through companies (LTCs) and partnerships

Rollover relief will also apply to transfers to or from LTCs and partnerships where the persons transferring the residential property to the LTC or partnership (or acquiring it from the LTC or partnership) and has the same ownership interests in the LTC or partnership interests in the partnership in proportion to:

  • their individual interests in the property, and
  • their cost base relative to the total cost base in the property.
Last updated: 17 Mar 2022
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