That's a good question. (See this article if you’re wondering what an LTC is)
IRD says yes, under certain circumstances (NB: this is not necessarily the best way to get into rental investment property. See the bottom of the page for our thoughts). Anyway, IRD recently wrote in TIB Vol. 24 No. 7:
Key points to note are
1. The home is rented “at arm’s length.” It means that each party to a transaction is independent and on an equal footing, despite any family relationship.
2. The sale is at market value. There are no “mate’s rates” here.
Questions? Contact us at EpsomTax.com or on 0800 890 132.
A Better Way to Get a Rental Investment Property
If you do the above, you go from having a medium to small mortgage which is not tax-deductible, to having a large mortgage which is still not tax-deductible. There’s a better way to do things! How? We recommend you talk to Goodlife Advice, who are Authorised Financial Advisors.
Accounting for your rental residential investment property; general taxation advice.