Hi Folks,
I hope someone can help guide me. My brother and I are looking at options of developing my mothers house/land with 3-4 townhouses. My mother has moved into a Nursing home some time ago and the old family property is sitting idle. We do not want to sell it, Dad passed away a few years back.
Issues are :
1. Is it possible to create a contract with our mother where we build the Townhouses and provide an income to my mother for use of the land?
2. If a contract can be created, does the contract need to be designed to allow for land ownership to pass to her children like her Will states?
3. Will banks lend to us under this arrangement?
4. We do not want to purchase the property from our mother now as it would mean high Stamp Duty costs, and, it would become an Asset issue for mums Nursing home.
Any other thoughts, idea's or experiences around this situation are most welcome.Thanks
Leo
Once your mother has been in the nursing home for 2 years doesn't the home form part of her assets under the assets test?
yes, but with income from 3-4 townhouses covering Nursing home costs in addition to borrowing costs should be OK.
Hi Leo,
Pretty much any arrangement can be bound contractually. In your case it may be worthwhile to consider becoming tennants in common on title. This protects the interests of your mother and your own interests if you are either tipping in cash or asking the bank to do so on your behalf. Later, if the property is sold in whole or part the owners on title are each entitled to a share of the gain according to their portion of ownership. There are of course more complicated trust structures that would allow the benefits to be funneled as the trustee (or trustee company) sees fit.
These are not simple structures, so make sure you get sound advice.
And good luck.Leo
Throwing my 6 pence in.
A) Will banks lend to us under this arrangement?
No hate to say they wont lend where the Title is in your mothers name and the loan is in your name.
Maybe a couple of ways around it but she will need to a party to the loan.
Course if you hold other unencumbered security this maybe different.Richard Taylor | Australia's leading private lender
christianb wrote:Hi Leo,Pretty much any arrangement can be bound contractually. In your case it may be worthwhile to consider becoming tennants in common on title. This protects the interests of your mother and your own interests if you are either tipping in cash or asking the bank to do so on your behalf. Later, if the property is sold in whole or part the owners on title are each entitled to a share of the gain according to their portion of ownership. There are of course more complicated trust structures that would allow the benefits to be funneled as the trustee (or trustee company) sees fit.
These are not simple structures, so make sure you get sound advice.
And good luck.Thanks for the reply. As Tennants in Common on Title will I need to purchase a portion of the property and incur Stamp Duty costs? If not, how is the best way to arrange this?
P.S. Just visited your website, congrats on move to Collins St. I may come visit depending on how this all goes.
Thanks
LeoHi Leo,
In my experience, cash does not have to change hands to trigger a stamp duty impost. The SRO would be interested in the transaction, and a declaration would have to be made as a matter of course when the title details are altered, so expect to pay stamps on the fair market value of the transfer. This would of course be better done when the property has the least value – before the development or sub-division.
The type of proposal you are suggesting will become more and more common, in my opinion, as the generation that enjoyed the 1/4 acre dream hand over to a generation more aligned with higher density living. And cross-generational ownership models will also become more common.
You're welcome to visit us at the new digs at Collins Street – not quite as glamorous as it sounds, it's a tiny, but conveniently located office – and again good look getting it together. What you are proposing takes some work, but sounds like it would be a rewarding project and investment.
Christian.
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