All Topics / Legal & Accounting / Transfer ownership

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  • Profile photo of pevanspevans
    Member
    @pevans
    Join Date: 2007
    Post Count: 6

    I have a situation.

     

    My wife and I are currently building a home in Perth of which up until about six months ago, we planned to live in. However, plans change and now we find ourselves living in Melbourne. After being here over six months we’ve decided we want to purchase a home.

     

    HOWEVER, as the home in Perth was to be our PPoR, I purchased the land and some of the construction costs with cash.

     

    My plan now is to effectively turn the house in Perth into an investment property. I’m hoping by doing this I can get back the cash used in that purchase to purchase here in Melbourne.

     

    What I want to know is how can I do this legally? Can WE (me and my wife) sell the house to my wife (of course, in the process pay stamp duty again). She’ll then be able to negative gear the property (she is on the top tax bracket). Or would it be better to set up a family trust (discretionary) and sell the property to the trust, with one of us as trustee and both as bene’s?

      

    I’m planning on seeing an accountant about it but was wondering if anyone could tell me if my ideas are on the right track?

     

    Regards

     

    Paul.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Paul

    Yes you certainly can but you maybe better off to consider selling the property into a Trust structure which would give you a little more flexibility as time goes by.

    We find that many of our clients are wanting the same thing as they often realise they should have stuctured the loan differently to maximise the interest deductions. One reason why we prefer to recommend 100% offset accounts to our clients.

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    If you and your wife own the house jointly, then you could only sell your share to her. She couldn't buy her own share. ANd this would effect the tax deductibility of it – effectively halving it i guess. Richard's suggestion sounds good.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of pevanspevans
    Member
    @pevans
    Join Date: 2007
    Post Count: 6

    Hi, thanks for your relies.

    My accountant has suggested selling my half to my wife.

    He tells me that all i need to do is obtain a market price for the land, then sell my half to her at half market value. As she would then have full title of the land, she is entitled to claim full deductions for the land and construction costs ( once the construction mortage had been refinanced into her name). As the land is worth around $500K , the selling price of $250K would only attract stamp duty of around $8000 in WA…

    Does this all seem ok to you guys…??

    I've just finished studying some Trust law at Uni and had considered that option.

    Paul 

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Sounds like an option. What would be the full stamp duty if you sold to a trust? Is it worth not using a trust to save this amount?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of pevanspevans
    Member
    @pevans
    Join Date: 2007
    Post Count: 6

    The full stamp duty would be over $50K.

    Profile photo of elkamelkam
    Member
    @elkam
    Join Date: 2006
    Post Count: 722

    Hello Paul

    How far along is construction? Are you quoting finished product when you value it at $500K ?
    Is it possible to value it quickly in it's "as is" status to reduce the SD liability?

    Cheers
    Elka 

    Profile photo of Colin GowanColin Gowan
    Participant
    @colin-gowan
    Join Date: 2005
    Post Count: 86

    I was already thinking along these lines myself although for different reasons.Is it possible to form a new trust around an already owned asset such as a house or must there be a sale to the new trust.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Yes you can sell the asset to a separate Trust with you as the Trustees.

    Richard Taylor | Australia's leading private lender

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