Hi all,
I need some help regarding our current situation:
My partner and i live in our PPOR and have two other IP b/ween us. We also have a line of credit of $50,000 which is invested in the share market.
We are looking to buy a further property in a new estate. This property is a display home which is on sale on a lease back plan returning 9% for two years. When this is up, we intend on making this our new PPOR.
Our current PPOR which in 2 years will become an IP is valued at approx $285k. We owe $117k. (in my name)
IP one. Value $295k Owe $255k. Currently fixed interest rate of 6.89% till early 2111. Currently rented out. (in my name)
IP two. Value $225k. Owe $200k. Currently rented out and finance i/only. (in my fiancees name)
Shares approx 10% up atm. This line of credit secured thru PPOR.(my name)
We have been told that i could sell our current PPOR to my partner without being liable for CGT and stamp duy (love and affection clause.)
Is this a viable/worthwhile option?
Was wondering how to structure what we are going to do with finance for the new property etc??
Any thoughts would be greatly appreciated as we are quite confused and it is obviously a huge financial commitment that we want to get right.
The Transfer of Title to your partner without Stamp Duty will vary from State to State (certainly here in Qld you would be liable for the Duty) so check that with the OSR in your Capital City. Must admit i would have been suprised it would be totaly exempt as it would be a 100% Transfer and not a Transfer of a percentage of the shares owned under a Tenants in Common arrangement.
Assuming you have combated this hurdle and decided there is enough benefit in making the Transfer then you would look to Transfer the security at the current market valuation borrowing 100% of the valuation amount and using the net surplus as deposit for the new property. As it will be an investment property initially you would want to offer the cash released from the Transfer as additional security until such time as you move into the new property when you have to reduce the borrowing amount secured against the PPOR loan.
As you will not be moving out for the next couple of years i would question why you need to look at doing the transfer now ?
Why not wait until nearer the time.
From your figures i am figuring the 2 loans are cross collateralised so ideally you would want the existing IP loans as standalone securities and maybe time will aid this cause.
Your Broker should be able to assist in unravelling the securities in readiness.
Richard Taylor | Australia's leading private lender
Thanks for the quick reply.
We are in victoria and i havent confirmed if stamp duty is payable yet.
Yes you are right re two of the loans being cross collaterised but it was unavoidable at the time i bought my first IP.
If you are right and stamp duty is payable in vic, what other suggestions would you have with how we should best go about it?
Can i re finance the house with the equity to then divert it into our future PPOR?
You can "Can i re finance the house with the equity to then divert it into our future PPOR" but the interest will not be Tax Deductible
Richard Taylor | Australia's leading private lender
So in answer to my dilemma, what would be my best bet with financing the new loan which will be approx $485k inclusive of s/d LMI etc?
May i be best to sell my property with all the equity and start again with a better structure?
Cheers.
You are lucky to be in Vic, as under s43 of the Duties Act you may be exempt from stamp duty:
http://www.austlii.edu.au/au/legis/vic/consol_act/da200093/s43.html
Duties Act 2000 – SECT 43
Marriage and domestic relationships
43. Marriage and domestic relationships
* * * * *
(3) No duty is chargeable under this Chapter in respect of a transfer of
dutiable property from one person to another person, or from two people to one
of them, or from one person to themselves and another person if-
(a) the people are spouses or domestic partners of each other; and
(b) no other person takes or is entitled to take an interest in the
property under the transfer.Terryw | 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
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