My wife and I are considering buying a third IP, our previous two IPs are in joint names 50/50 however this doesnt appear to be a very clever move as I am on the top tax bracket and my wife is only earning $25000 a year, I understand that I can put the next IP in joint names but 99% in my name and 1% in my wifes name to take better advantage of tax deductability.
If we go ahead with this idea can someone tell me exactly what is split in this way is the loan account or is the title be be split 99 / 1 ??
Or am I better to just put the whole property in my name and get my wife to go as guarntor, as she is joint owner of the other two IPs and our PPOR which is providing the equity for the next IP.[confused2]
Thanks
brownegazThe loan is in joint names. The property title is 99/1. The only reason I do it that way is to set up new land tax accounts. Different owners by way of percentages results in a new land tax account being setup.
For tax purposes I would speak to an accountant and set up a structure that works best for your situation.
Having her guarantee the loan while you put in entirely in your name works, but when you sell you have the issue of capital gains at the higher tax bracket. Lots to consider here.
Byronent
Adelaide SAWhy not just use a trust?
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi,
The other contributor has suggsted correctly that you seek the advise of a property accountant. If you want some advice without the benefit of consulting an accountant, then I offer the following.
The title would be 99/1. The way to achieve it is buying the property as tenants in common. Ensure that your lawyer understands this, as they usually put it as joint tenants when it is married couples buying a property – this is 50/50 ownership while both parties are alive but invokes survivorship rules on the death of one of the parties; the surviving partner owns the property, it does not form part of the deceased’s estate, so cannot be included in their will.
Your wife could go as guarantor of the loan. This is preferable to having her name on the loan. The ATO are inclined to say if the loan is in joint names, then the loan expenses must be claimed 50/50. If the property is owned 99/1, this may convince them that this is the appropriate proportion to use. I have not tested that with the ATO. However, the first case is a real danger.
To protect your wife’s property rights, you could do the tenants in common 99/1 ownership, so that you could not sell the property without her knowledge. Otherwise, you could own the property 100% and your wife have a caveat on the property to advise her on any action to deal with the property – either sell it or put a mortgage on it.
I hope this assists you. However, you should seek advice to ensure that your best interests are served in the way you structure the ownership of the property.
Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne Bay
Auckland New Zealand
Ph +64 9 360 3259
Fax +64 9 360 2180
http://www.masteraccountants.co.nz
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