Hi everyone
First of all, let me thank you all for all your great advice!! My wife and I are about to own our first investment property.. if all works well (fingers crossed.. ) [^]
Here is the scenario :-
I currently co-own a house with my wife and my mother. My wife and I are thinking of moving out and finding a place to rent for one or two years before buying our own house.
We have agreed to transfer the title on the current house (currently in three names as mentioned above) to my wife and I only.
The house will then be rented to my mother at the current market rate.Our main concerns now are :-
1. Is it easy to transfer titles? What are the costs and procedures involved usually? Is it a lengthy process?
2. Will there be any stamp duty payable on the transfer? My wife and I currently own 75% of the property.. so in effect we will be acquiring the remaining 25% of the property when transferring title into our names.
3. Will it be easy for my wife and I to claim tax deductions the same way as if the property was being rented to a third party? In this case, the tennant will be my mother…
4. When claiming tax deductions on the investment property between my wife and I, does the proportion of tax benefit you can claim depend on the percentage of the ownership of the asset that you hold?
5. We would also need to transfer the home loan to my wife’s and I solely. We do have the servicing capacity. The loan will be converted from an Owner Occupied property loan into an Investment loan.
Are there any issues we should be aware of in doing that?6. Is this feasible at all? Any advice, experience that you could share with us??
Looking forward to hear from you!
Thanks heaps!!! [
]G.
Yes it is feasable, I have done something very similar myself.
You will, in effect, buying you mum’s share. So she will need a soliticor for the sale and you for the purchase. cost about $500 ea. You could do it yourself, if you know what your doing. Stamp duty would be payable basedon the value of mum’s portion. It shouldn’t take too long, but you will have to change you loan as well as the onership of the security is changing. So that is another cost and more time to arrange.
You can claim costs according to your percentage of ownership.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Thanks for the reply!!
Is there a way to minimise the Property Stamp Duty? The property is in NSW. On what amount will the Stamp Duty be based on?
Is it a percentage of mum’s ownership of the property x market value of property??My mom has agreed to forsake her share to us at “no consideration” as we will be taking over the whole mortgage anyways…
Now, is it possible to do the transfer of land at “no consideration” or should there be a sum of money transferred on settlement which is equal to her share of the property?
If the answer is yes, can this amount be below the market price… indireclty, she will in effect be giving us a non-repayable gift…Will there be tax complications later on when we evnentually claim tax deductions using that investment property??
Hi Gunners
Stamp duty is definaltely caluclated on the fair market value even if the buyer and seller agree on a below market price. I am not 100% certain on this without looking it up, but stamp duty is exempt in a no consideration sale only when the property comes from a deceased estate (I suppose that gives you one option[}
]) and the vendors intend to pmake it the PPOR. Now I read that on the NSW Office of State revenue website under duties, but like I said I am not sure if I am recalling it correctly.Basically there is very few ways of avoiding stamp duty, so just assess if going ahead is going to improve your investing position.
Cheers & Good Luck
Leigh K[]Carve your own path and lead the way …
You need legal advice on this one as your mother’s income needs to be taken into account for both taxation and any pension that she may be entitled to.
If I knew then what I know now……….you know how it goes
Thanks for the reply ActToday!
In what sense will this affect mom’s tax situation?
Sje has got super annuation, so the question of pension does not really come into play I think…
Basically she will not have any assets anymore and will be renting from us…
We will then be using the investment property for tax deductions..Cheers
G. [
]I’m not sure Gunners but I think she will need to declare that she has disposed of property and the value in her tax return. A phone call to the Taxation Department will give you an answer. If she was on a pension she would most certainly have had to declare the gift. Please keep the thread going as I for one am interested to know how you get on.
Good luckIf I knew then what I know now……….you know how it goes
mom is willing to give her share at no consiuderation, however when we do the transfer, should there be a money amount on the transfer certificate??? or can it be NIL?? I am aware though that stamp duty will be assessed on the market value of her share…
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