Rollover relief

Rollover relief allows you to change the  legal ownership of property after 27 March 2021 while allowing you to deduct a portion of your interest expense during the interest phase-out period.  

Rollover relief applies for interest limitation purposes when residential property is transferred as follows:

• under a settlement of relationship property
• as part of a company amalgamation that qualifies as a resident’s restricted amalgamation
• after 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.

Look-through companies (LTCs) and partnerships

Rollover relief applies in certain circumstances to transfers to or from LTCs and partnerships.

It applies for a person who is a shareholder in the LTC or a partner in the partnership, to the extent they have the same ownership interest before and after the transfer.  

Family trust

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

• each transferor (in the case of transfers to a trust) or each transferee (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
• 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. 

Also, when the trustees of a family trust transfer the property back to the settlors who first transferred the property to the trust, each recipient’s proportionate interest in the property must be the same as what was held before the property was transferred to the trust.

Rollover relief may apply to a transfer from the trustees of a qualifying family trust to the settlors, even if the settlors did not previously transfer the property to the trust, but the trustees instead acquired the property from a third party. In this case for rollover relief to apply all the settlors receiving the property from the trustees must have been principal settlors of the trust both at the time the trustees acquired the property and when the trustees transferred the property to them.

If certain criteria are met, rollover relief also applies when residential property held in a qualifying family trust is resettled onto another family trust.

Rollover relief does not apply when you transfer shares in an LTC to a trust.

Māori authority or Māori family trust 

Rollover relief is 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 following apply:

• the residential property is subject to Te Ture Whenua Māori Act 1993
• each transferor is both a settlor and beneficiary of the trust
• 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).

Also, when the trustees of a trust transfer property that comes under Te Ture Whenua Māori Act 1993 back to the persons who first transferred the property to the trust, each recipient’s proportionate interest in the property must be the same as what was held before the property was transferred to the trust.