Bright-line rollover relief: family trusts, partners and relatives

Rollover relief lets property move between closely connected people without a bright-line tax bill. Since 1 July 2024, a transfer between associated persons, or to a family trust whose beneficiaries are all associated with you, is treated as made at cost. The new owner takes over your bright-line start date and your cost. Two conditions do most of the work: you must have been associated for at least 2 years before the transfer, and associated-person relief can be used only once in any 2-year period. A common myth says putting a house into a family trust restarts the 2-year clock. Inland Revenue says it does not.

What rollover relief does

This guide is general information, not tax advice. Trust and relationship structures differ, so check with your accountant for your situation. Rules checked 10 November 2026 against Inland Revenue's IR1229 Bright-line property tax (March 2026).

Normally, a transfer within 2 years of the owner's start date is a taxable disposal, with a gift treated as made at market value, and the new owner starts a fresh 2-year period.

Rollover relief changes both halves of that. IR1229 (p27) says:

• the person transferring the property "will not be taxed at the time of the transfer", because they are treated as selling it at cost; and
• the person receiving it is treated "as having purchased the property at the same time and for the same price" as the person they received it from.

It covers inherited property (see our inherited property guide), relationship property agreements (see selling after separation), resident's restricted amalgamations, certain Māori land and Treaty settlement transfers, and the two cases this guide is about: transfers between associated persons, and transfers to a trust whose beneficiaries are all associated with the transferor (or are charities).

Rollover is not an exemption: a new owner who sells within 2 years of the original start date is taxed on the whole gain, unless an exclusion such as the main home exclusion applies.

Who counts as associated

The bright-line test uses the general (non-land) associated persons rules in the Income Tax Act, explained in IRD's guide IR620. IR1229 (p30) lists the main associations, including:

• two relatives within 2 degrees of blood relationship;
• a person and a trustee of a trust if a relative of the person is a beneficiary;
• a trustee and a person who has benefited or can benefit under the trust;
• a trustee and a settlor of the trust, and a settlor and a beneficiary;
• trustees of two trusts with the same settlor;
• companies with 50% or more common ownership, and a company and a person with a 25% or more voting interest;
• a partnership and a partner in it, and similar links for look-through companies and limited partnerships.

Relatives: the 2-degree rule

IR1229 (p31) says a family member is associated by blood if they are your parent, grandparent, child, grandchild or sibling; by marriage if they are your spouse, civil union partner or de facto partner; and as in-laws if they are those relatives of your partner. Adopted children count as natural children. Aunts, uncles, nieces, nephews and cousins are outside the rule, which is why IRD's Kai example (below) fails for a niece.

Partners and partnerships

"Partner" means two things here, and both can qualify. A spouse, civil union or de facto partner is associated, so a transfer between partners can get associated-person relief; a transfer under a relationship property agreement has its own separate relief. A business partnership and its partners are also associated.

The two 2-year rules

From 1 July 2024, associated-person and trust rollover has two time limits (IR1229 p30). They are easy to confuse.

The recent relationship exception

IRD's Chris and Manaia example (IR1229 p34) shows the first exception. Chris buys a property for $600,000 with a start date of 15 February 2022 and transfers it to the Manaia Trust on 1 October 2024. The only beneficiary is Manaia, Chris's de facto partner only since 1 June 2023, but relief applies because the association is due to a recent de facto relationship. The trust is treated as buying on 15 February 2022 for $600,000.

The second rule stops a property being passed along a chain of associates with relief at every step, as IRD's Jocelyn example below shows.

The myth: a trust transfer restarts the clock

A widely repeated claim is that transferring a property to your family trust restarts the 2-year bright-line period, as if the trust had just bought it. Where associated-person rollover applies, that is wrong. IR1229 (p32) says that where an individual associated with a trust transfers property to it, the trust is treated as buying "on the earliest day that the property was transferred to the trust and at cost. The bright-line clock will not restart for the trust."

IRD's Jocelyn example (IR1229 p33). Jocelyn owns a property with a start date of 4 June 2024 that cost $750,000. In December 2024 she transfers it to her family trust. She has been a settlor, trustee and beneficiary since the trust was set up in 2020, so she has been associated with it for more than 2 years. The transfer gets rollover relief: Jocelyn is treated as transferring at $750,000 with no bright-line tax, and the trust is treated as buying on 4 June 2024 for $750,000.

Fact variation. In June 2025 the trustees transfer the property to Jocelyn's sister, also a beneficiary since 2020, who plans to renovate and sell. She is associated with the trust, but the property was already moved with rollover relief within the last 2 years, so relief "cannot be used again". That transfer is subject to the bright-line test.

Suppose the trust signs to sell on 10 June 2026:

The trust also takes Jocelyn's cost, so a sale within 2 years of 4 June 2024 is taxed on the gain since she bought. Our bright-line end date calculator shows the anniversary for any start date.

Worked example: a child and a niece

IRD's Kai and Anji example (IR1229 p32) is the simplest case. Kai's property has a start date of 7 July 2024 and cost $850,000. She rents it out, then transfers it to her daughter Anji on 10 January 2025. Parent and child are associated, so relief applies: Kai has no bright-line tax, and Anji is treated as buying on 7 July 2024 for $850,000. If Kai had transferred it to her niece or nephew, relief would not apply.

To show what that means in dollars, here is the same pattern with our own figures in the 2026/27 tax year. A parent buys a rental with a start date of 1 June 2025 at a total cost of $700,000. On 1 May 2026 the parent transfers it, when it is worth $740,000. The new owner rents it out and signs an agreement to sell on 1 February 2027 for $780,000, settling on 1 March 2027, with $15,000 of selling costs. Everyone involved earns $60,000 a year.

In both cases the same $65,000 of gain is taxed; rollover moves all of it to the new owner. On $60,000 of other income, the first $18,100 of each person's gain is taxed at 30% and the rest at 33%, so splitting the gain between two people puts slightly more of it in the 30% band.

Rollover makes a real difference when the new owner can hold past the original anniversary, or qualifies for the main home exclusion. Signing after 1 June 2027, the child would have no bright-line tax; the niece would wait until after 1 May 2028. Our guide to how the gain is taxed explains the bands.

Main home use carries over

When rollover relief applies, time the original owner used the property as their main home is attributed to the new owner (IR1229 p34). IRD gives two examples:

• Hamish and Jess buy their first home in July 2024 and settle it on the HJ Family Trust, live in it for 12 months, then transfer it to the H & J Family Trust, which rents it out and sells 6 months later. Their 12 months of main home use is attributed to the second trust, so the main home exclusion applies (12 of 18 months).
• Eddie lives in a property for 18 months, then transfers it to Baxter Limited, his look-through company. If the company sells on 13 March 2026, within 2 years of Eddie's start date, the exclusion still applies because Eddie lived there for more than half the period.

Trusts face extra conditions about the principal settlor's main home; see our main home exclusion guide and the main home test calculator.

Transfers before 1 July 2024 and other rules

The current associated-person rules apply to transfers from 1 July 2024. Inland Revenue's IR1227 covers the earlier rules. From 1 April 2022 until 30 June 2024, relief covered certain transfers to or from family trusts, look-through companies and partnerships, and depended on the price: full relief at or below the original owner's cost, and partial relief above cost but below market value, where the original owner could be taxed on the excess over cost but the start date still did not restart (IR1227 pp42 to 43).

The intention test can follow the land. QB 25/08 (para 40) says land received from an associated person can be taxed under section CB 15 if the associate would have been taxed under the intention test had they kept it. Rollover relief is a bright-line rule and does not switch that off. See our intention test guide, and for a sale at a loss, ring-fenced losses.

To test a sale, choose "rollover" under special cases in our bright-line calculator.

Questions people ask

Does moving my house into a family trust restart the bright-line period?

Not where rollover relief applies. IR1229 says the trust is treated as buying on your original start date at your cost, and "the bright-line clock will not restart for the trust".

Can I use rollover relief to transfer a property to my niece or nephew?

Not as associated persons. Relatives are associated only within 2 degrees of blood relationship: parents, grandparents, children, grandchildren and siblings, plus partners and in-laws. IRD's Kai example says a transfer to a niece or nephew does not qualify.

What is the once-in-2-years rule?

Associated-person rollover relief can be claimed for a property only once in any 2-year period from the first transfer. In IRD's Jocelyn example, the trust's transfer to her sister within 2 years of receiving the property was taxable.

My partner and I have been together for less than 2 years. Can we use rollover relief?

Yes, potentially. The 2-year association requirement does not apply to people associated through a recent marriage, civil union or de facto relationship. IRD's Chris and Manaia example relies on this exception.