All Topics / Finance / Equity Question

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  • Profile photo of rickimrickim
    Member
    @rickim
    Join Date: 2012
    Post Count: 14

    Hi all,

    I’ve done some quick research on the net and couldn’t really find a clear answer to my question so I’m hoping some of the experts on here could help. My question is, is there any possible way that a property owner can transfer the equity in their home to another person?

    Cheers for any help

    Profile photo of kong71286kong71286
    Participant
    @kong71286
    Join Date: 2009
    Post Count: 261

    Hi Rickim,

    If you don't me asking, why would you want to transfer the equity in your home to someone elses?

    I'm not an expert in this field, but I believe there are a lot more fees and taxes involved when you want to transfer equity between individuals – If it were owned under a trust structure it might be easier and less costly

    Cheers,

    Kong

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470

    Yes I would think it could be done via a loan type arrangement. I have heard someone (I cant remember his name) from Chan and Naylor talk about equity shifts as an asset protection strategy. They charge an arm and a leg so I am sure there is someone out there who could do it for a more reasonable fee.

    What are you trying to achieve? Asset Protection?

    Cheers,
    Luke

    Profile photo of rickimrickim
    Member
    @rickim
    Join Date: 2012
    Post Count: 14

    Hi Guys,

    Thanks for your replies. I am not trying to do this myself, someone had actually told me that it could be done but i just couldn’t understand how you could do it, as i don’t see equity as something that would be transferable. . .

    Profile photo of Your BrokerYour Broker
    Participant
    @your-broker
    Join Date: 2012
    Post Count: 22

    It is a very open question. For what purpose are they looking to do it? Eg. Assert protection, for some one else to get finance? There are ways to do both but they are both totally different.

    You might need to elaborate on the situation.

    Dustin McMahon
    Your Broker
    0430 110 304
    [email protected]

    Profile photo of rickimrickim
    Member
    @rickim
    Join Date: 2012
    Post Count: 14

    Yes, I’m interested in how the equity could be transferred as a gift to another family member.

    Scenario: ‘Bill’ has a $220,000 mortgage, his property was recently revalued at $300,000. Bills brother needs $65,000. Can Bill transfer his equity in the form of cash as a non-refundable gift to his brother? How would this be achieved and what possible fees/losses would be involved?

    This is not something i want to do, i have simply just been told it was able to be done but i couldn’t understand how it was possible

    Cheers

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    An equitable assignment would be possible. But this would be a breach of mortgage agreement and a dutiable transaction.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Your BrokerYour Broker
    Participant
    @your-broker
    Join Date: 2012
    Post Count: 22

    I would think in basic terms no you couldn’t do it. Generally to access the cash you would look at taking another mortgage to access the cash. As the client already has a $220k loan they could only access $20k at 80%. They may be able to go to 90% but then they would pay LMI.

    Hope this clarifies. Without knowing the full situation and what they are doing it for it’s hard to know the best way to do it.

    Regards
    Dustin McMahon
    Your Broker
    0430 110 304

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190
    Terryw wrote:
    An equitable assignment would be possible. But this would be a breach of mortgage agreement and a dutiable transaction.

    It would also be a CGT event.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of rickimrickim
    Member
    @rickim
    Join Date: 2012
    Post Count: 14

    thanks guys. Its pretty much what i thought, it can’t really be done as simply as transferring equity as cash to another person ;)

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