Both name or one name on Title

As far as I’m aware, you will incur Stamp Duty whenever you change ownership of a property.

Cheers

Katsu, as Margaret Lomas would say, don’t just think of today, think of tomorrow. If the investment property will be paid off or positively geared within a short time, maybe it should go in your name, so you will effectively be ‘income splitting’, ie not all income will be earned in name of high income earner. We should have done this with one of our properties, but we went in blindly and put it into my hubby’s name, since I was having babies, but now it is pos geared and I would be better off ‘earning’ the income than him, paying 47 cents in the dollar…

SO, if the prop will be neg geared for ages to come, maybe in her name, but think…

Banks are fine about prop being in one name and both names on the loan – how do YOU feel about that, you’re responsible for half the debt, but you don’t get half the house? Your partner can sell the house without referring to you whenever she wants? Do you trust her? If you plan to work again soon, and you’re not so certain your partnership is for life, I’d be getting my name on that contract too, and buggar the neg gearing bit…THINK. What does your gut tell you?

Re stamp duty. I THINK, if you rent the house as an IP for a while, but then you both move in there, and it is your PPOR, ie you get your mail there, you put it on the electoral role as your address, etc, you can get your name put on to the house title free of stamp duty. Basically, ring Office of State Revenue if you want to check the rulings exactly, but effectively your partner ‘gifts’ half the house to you, for nil dollars, so no stamp duty owing, BUT ONLY IF IT IS YOUR PPOR, not an IP.

Good luck.

Kooringal

quote:

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Hi Wise ones,

I’m about to purchase a house for my frist IP,(neg gear) but not sure what is best for tax and the bank.

Suitation is , my partner is in the higher income than me and I’m about to losse my job due to retrenchment so I’m not sure how long that I will be out of a job. ( Banks does’nt know ).I pefer to have my partner name on the title because she is in a higher tax bracket.

Questions

1. How can I get one name on the title and would the bank be happy ?

2. Is there a way you can change ownership without paying stamp duty?.

3. What are my options.

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[If you purchase a property in joint names, then the bank views the debt as jointly and severally liable. What this means is that if you borrow $200K then the banks treats it as both of you have borrowed $200K each totalling $400K which will severely impact your future borrowing capacity.

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You could put it in both names but specify 90% ownership to higher income earner and 10% for lower ( you can vary these percentages as you wish, it doesn’t have to be 50/50). This would help taxation deduction for higher income earner but still have both names on the title. At tax time the income/expenditure for the property is also split this way. It needs to be done at time of purchase and recorded – check with your solicitor/accountant.
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Hi

I am a mortgage broker and think JohnD makes a good point.

If you get a $200,000 loan with your spouse (or anyone) and then go for another loan on your own, when the bank looks at your serviceability, it will generally consider you liable for the whole $200,000 (But will only take into account half of the rent you receive for that property).

This is a common problem I see daily. When things are borderline we can argue that they are only responsible for half the debt, and it will probably get thru, but when things are tight it is harder.

So I think from a long term point of view (if you plan to buy many properties), it may be worth considering putting one person on title. Banks and Mortgage Insurers also often have maximum exposure limits (ie Max total lends) so keeping things separate will help.

Terryw
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