Hi All,
First post but long time reader. fanatstic site.
Hope someone can help me with a CGT question.
I own a property with my parents. We all have 1/3 share. I have used it as my PPOR since purchasing it in 2000. I now wish to buy the remaining 2/3 share from my parents so I own 100%. I am aware that I will be liable for Stamp Duty on the transfer but my question is on the CGT treatment for my parents. Will they be subject to CGT. They will transfer to me for free.
Is there a specific CGT exemption using the main residence rulings or will CGT apply at the market rates. Can my parents claim the exemption on the basis that I have used it as my PPOR?
My parents have an existing PPOR that they have owned pre 1985.
Thanks
FPTDIt is your parents main residence/? or have they ever lived there and do not own another property? If so they may claim the CGT exemption.
If they have another property then i think they will be up for CGT>
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
They will be up for CGT on their share. As it is being transferred for no cost, the CGT value will be the market value at the date transfer.
The CGT will be (market value less cost) x 2/3 (parents' share) x 50% (as owned over 12 months).
Have your parents paid any interest, holding costs or repairs? If so, they could use the amount spent to increase their cost base, and reduce the amount of capital gain.
Have you paid rent to your parents?
Was there any agreement or arrangement made when the prioperty was purchased between you and your parents as to what would happen in the future?
Thanks for the repiles. Much appreciated.
It was always my main residence. Could my parents claim this as their residence also given their existing property was purchased pre 1985 and would not be subject to CGT if they decided to sell. Thinking outside square here…
My parents have paid no costs towards this property. I have paid for everything including mortgage. I have also not paid any rent to my parents.
Will my parents be able to increase their cost base if we say there was an agreement to contribute? We did not document anything but could we do retrospectively?
We really made a mistake with the structure to begin with. It should have been 100% in my name as it was always intended to be my place.
I am about to turn it into an investment property hence why I want to get it into my name 100%. My parents are about to retire and do not want to hold this property in their name any longer.
I think they could only claim the main residence exemption if they lived in the property initially.
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
Are your parents intending to go on a pension? If so giving the property to you could affect their entitlements. You need to get advice as to whether at the acquisition of the property it is possible to argue that the property was always your under an arrangement with your parents. You will probably need a Private Binding ruling.
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