I have been reading some dicussions, but never been part of any, so this is a first for me, i am not certain if i am doing it right. anyway, my query is:
several years ago, my friend’s (A) marriage broke down, they never divorced, just separated. after getting legal advice and divying up their assets, they agreed that as part of the out of court settlement agreement that A would take possession of their rental property. The house was then legally transferred out of joint ownership of A and husband, into her name soley. now A is looking at selling this property as she has come into some financial problems. the property was originally bought around 10 years ago, by A & her husband, then 4 years ago it was transferred into A’s name as part of their settlement agreement. I don’t believe the husband paid any GST associated with the transfer. A never lived in this place, and still rents it out, but where does that leave A if she sells it now. When does she have to calculate CGT from. ie: the date she & her husband acquired it, or the date she acquired it, 4 years ago?I would appreciate if someone could steer me in the right direction to find this out, as I have tried the ATO site, but it all gets confusing.
thanks
Missy[
]Hi Missy
Welcome to the forum, I glad you have found a resource to help with this unfortunate situation.
I am please to let you know that I have found the information for you.
This is an excert of the ruling and below is the link to the ruling.
Marriage breakdownIn certain cases where an asset is transferred from one spouse to another after their marriage breakdown, any CGT is deferred until a later CGT event happens (for example, when the former spouse sells the asset to someone else). For more examples of how CGT obligations are affected by marriage breakdown, see chapter 8.
It’s not what she wanted to hear but it is the answer. Hope it helps.
Cheers
Leigh K[]Carve your own path and lead the way …
Hi
Please read Julias comments as part of a similar issue I raised.
https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=6236
(I havent learnt how to paste in a link yet ??)
I have discovered this to be a little more complicated issue – than I first thought.
[
][]Regards
Regards
“Do not follow where the path may lead. Go instead where there is no path and leave a trail” Ralph Waldo Emerson
Missy,
As it was an out of court settlement you friend cannot use the rollover relief on marriage breakdown.
So your friend aquired half the house 10 years ago at half the original purchase price costs etc and she acquired the other half 4 years ago at the market value then plus stamp duty & legals on the transfer.
Her husband should have paid CGT when he transferred his half. The ATO now automatically look into a tax return when rental income stops and there is no capital gain schedule so she won’t be as lucky as her husband was.Thank you all for your help. you have been fantastic. i will look up the sites you suggeted.
on the face of it, it sounds like it’s going to be a bit tricky to work out, as i take it from Julia’s comment that A will have to do two part GST calculation. thanks again.
missy[]
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