Hi,
I am about to purchase a property with my son as a way of helping him to his foot into property market. The intention is to joint purchase, subdivide, build two units, one for him and the other for myself, both as principal residents. Some questions that come to mind for me are:
– How should names appear on title and what are the implications after subdividing and splitting names.
– Whilst property is initally held pending re-development, it would be operating as an IP. Post development they become principle residences, what care should be taken around CGT etc.
– How would he best maximise the FHOG ? Also, I notice there is a $500k limit on FHOG, given he would be purchasing half of property is there anyway he can get around this limit.– Recommendations of any professionals in this area that I could talk to if answers cannot be found via forum.
Thanks in advance.
Peter
Hi Peter
This is a complicated area and you will need some expert advice.
If you change names after sub division, then you will have stamp duty issues – and maybe CGT. Maybe even GST issues too?
There is a way around this, aparently, in some states. You draw up a deed of partition so you each x% each of the original block. Then when you subdivide, as long as the % ownership remains the same, you may be able to avoid stamp duty.
If you are going to rent the properties out initially, then you will probably have CG applied to this period – when you get the sub division, the value could increase a fair bit which may make your CGT higher if it is a rental during this period.
If you have owned a property before, then I don't think your son could get the grant if you are on title.
Maybe to minimise CGT, your son could move into the property immediately after settlement and establish it as his main residence – then rent it out. He may be able to get the CGT exemption on his share.
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
I agree with you, but only in part – you might want to check earleir posts re this very vital matter
Which part do you disagree with?
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
Peter
Have a look at the latest Bantacs newsletter, http://www.bantacs.com.au/newsflash/current_issue.pdf
there is bit on "building a duplex with a friend"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
Thanks Terry for your response.
As it has turned out I have purchased the property so am now looking for a solictor that can help with the best way to structure along with dealing with the conveyancing.Can anyone provide recommendations for Melbourne based person ?
Thanks,
Peter
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