Four investors, one name on title

This will be complex. You need to speak to a lawyer and probably get an agreement drawn up.

You could transfer to a trust, but you would be up for stamp duty again. Doing a co-owenership agreement may be easier abd you can work out an arrangement on who pays what and who gets what on the sale. Can also cover death – but as you are sole owner your property will pass to your estate on death and then distributed as per your will.

Some potential issues/problems
– what if you go bankrupt? How do you protect the shares of the other parties?
– Tax. How can the other parties claim any negative gearing etc – if applicable
– Equity – what happens in the future if one not on title wants to get access to some equity (can cover this in the agreement)
– Disputes.
– Exiting. What if one person wants out? How is this acheived and how much do they get, do the others have to buy there share etc?
– Risk. If things go back it is the title holder that gets hit.

As Terry has mentioned the matter is fairly complex and you should see Professional legal and Financial advice.

If you have recently purchased the property as your PPOR you probably qualified for a stamp duty concession and the FHOG.
Selling the property into Trust or similar may mean that these have to be repaid if you have not lived in the property for the required period of time.

Another question is WHY would you want to do this.

Would you not be better off to start again with a new investment property purchased in either all 4 names or with 4 Unit holders.

I should also point out that jointly owning property can have adverse consequences on borrowing capacity for future properties. Since  each person is responsible for the whole loan, lenders will assume each person is paying the whole mortgage. But each person is only entitled for 1/4 of the rental income.

Hi B

Beneficial ownership is when someone else owns something for you. They are the legal owner, but you are the real owner.

Adverse future borrowing consequences can be avoided if you plan ahead and try to keep one person in control. You need to limit people the number of people borrowing/guaranteeing the loan. say you needed an income of $80,000pa to service the loan, you would be 'wasting' people by including 4 people earning $80,000 each. I would use one person this time, and then the other 3 will have clean borrowing records and they have borrow in the future more easy. You could increase the total borrowing capacity by 4.

So what you need to do is limit this somehow while giving the others the benefits as well. A trust can work in this area, though you have to be careful with the wording of the trust with some banks – if others are mentioned on the trust then some banks want a guarantee from them too. You would have the trustee as one person, or as a company with one director, and that way only 1 has to guarantee the loan – usually. When that person maxes out on borrowings, a new trust can be formed with the next person as trustee, and so on. Each person can still benefit from the profits/incomes as a beneficiary.

You could also just buy in one name and then have an agreement to share things

Hi B

Yes, it is best to learn as much as you can before seeking advice – its all good knowledge and will save you money.

For this one, since you have already purchased, I think you should just try to protect everyone as much as possible and then plan for the future ones by looking into using trusts etc.

B

I think you should probably work out the profit after taknig into account all holding expenses, buying and selling costs, any land tax, CGT tax etc, and then share it as per your ownership percentages.