All Topics / Help Needed! / Transfering title of home to a spouse

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  • Profile photo of LinarLinar
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    @linar
    Join Date: 2004
    Post Count: 567

    Based on the legislation posted above, presumably NSW and QLD, it looks to me that these transfers are only exempt if the transfer is from one party to both.  For example, if one person owns the property, they can then transfer the property into both their names.  Based on the above, it doesn't seem to me that the transfer can be from one spouse to another, removing the original owner entirely.

    The only way this could be done is as part of a property settlement (divorce).

    K

    Profile photo of WJ HookerWJ Hooker
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    @wj-hooker
    Join Date: 2007
    Post Count: 272

    Linar,
              Thus, once you have finished claiming your IP deductions over time and payed off your loan ( all in your name ) since you are the one with all the income and wife without. You can then transfer half to your wifes name without paying CGT.
              Then get another loan for an IP in your name ,again , and do the same so to speak ???

    Profile photo of TerrywTerryw
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    WJ

    It sounds like a strategy. You would have to move into the house though.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Dan42Dan42
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    @dan42
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    WJ Hooker wrote:
    Linar,
              Thus, once you have finished claiming your IP deductions over time and payed off your loan ( all in your name ) since you are the one with all the income and wife without. You can then transfer half to your wifes name without paying CGT.
              Then get another loan for an IP in your name ,again , and do the same so to speak ???

    You would have to pay CGT on any transfer of ownership, or part ownership on an IP, assuming that you don't qualify for the six year rule.

    Profile photo of WJ HookerWJ Hooker
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    Terryw and Dan42,

                                      Yes thanks Terry agree with that.

    Dan yes you are correct also.

    It was just a thought that came to my head, it may need some more thought, but it may be worth it to some people.

    Profile photo of LinarLinar
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    @linar
    Join Date: 2004
    Post Count: 567

    Hi WJ

    I think that you are correct.  If it was an IP and you transfer into your joint names then you would have to pay CGT on the market value of the place at the time of the transfer.  And it would have to become the PPOR for you and your spouse.

    I don't know that there is any real benefit though.  If you owned an IP in your own name and then made it your PPOR there is no CGT payable.  Someone more financially astute may correct me here but if it was an IP in your own name then you would be better off keeping it in your own name and making it your PPOR because at least you wouldn't have to pay CGT.

    Cheers

    K

    Profile photo of Dan42Dan42
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    @dan42
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    Linar wrote:

    Hi WJ

    I think that you are correct.  If it was an IP and you transfer into your joint names then you would have to pay CGT on the market value of the place at the time of the transfer.  And it would have to become the PPOR for you and your spouse.

    I don't know that there is any real benefit though.  If you owned an IP in your own name and then made it your PPOR there is no CGT payable.  Someone more financially astute may correct me here but if it was an IP in your own name then you would be better off keeping it in your own name and making it your PPOR because at least you wouldn't have to pay CGT.

    Cheers

    K

    The requirement to pay CGT depends on the circumstances. If you bought an IP, rented it out from day one, then 5 years later converted it to your PPOR, then sold it 10 years after that, you would be up for CGT on the time it was an IP.

    If the house was bought as a PPOR, then rented out for 5 years, then back to a PPOR and sold, you wouldn't pay any CGT, provided you did not have another PPOR during the time the property was rented out.

    Profile photo of god_of_moneygod_of_money
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    How about if you transfer PPOR to DFT, and then purchase another PPOR… would it exempt from capital gain for the 2nd PPOR?

    Profile photo of LinarLinar
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    @linar
    Join Date: 2004
    Post Count: 567

    If you transfer your PPOR to DFT you would have to pay stamp duty on the transfer.

    My policy is to never transfer property from one entity to another after I have bought it.  The costs are just too great.  I have a couple of properties that I wish I had purchased in another entity, but I won't be transferring them over.

    Cheers

    K

    Profile photo of StumpCamStumpCam
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    @stumpcam
    Join Date: 2006
    Post Count: 76

    I've been thinking about buying my next IP in my wife's name, for asset protection reasons and because I've just crossed over the land tax exemption threshold, so I've done a bit of an analysis which shows the cumulative cash flow after tax for various incomes, ie 0, 15k, 60k, and 100k, and various number of years, ie 5, 10 15 and 20. I'll paste it below:
    Shame I can't set it to non-proportional font eg Courier. (Years ago we had a "code" setting which would keep tables aligned)
    You'll just have to count the spaces.

                               —Cumulative Cash Flow Totals– (positive = cash out, ie total cost)
    Income , Loan,   Interest , 5 Yrs ,  10 Yrs , 15 Yrs , 20 Yrs



            0  400000     6.5       51929   80229   77923   36199
     15000  400000     6.5       43727   62294   55690   18996
     60000  400000     6.5       22750   31137   18575  -15958
    100000  400000     6.5       13488   18293    4979  -28666



            0  300000     6.5       19429   15229  -19577  -90945
     15000  300000     6.5       11704    2944  -30579  -90004
     60000  300000     6.5         489  -12382  -43957  -97503
    100000  300000     6.5       -5525  -19733  -50868 -101901



            0  200000     6.5      -13071  -49771 -115460 -213875
     15000  200000     6.5      -17731  -53049 -111776 -193463
     60000  200000     6.5      -21775  -54909 -105496 -178054
    100000  200000     6.5      -24537  -57757 -106428 -270660



            0  400000     9.0      101929  180228  227921  236011
     15000  400000     9.0       93727  160216  195090  197564
     60000  400000     9.0       57096   99571  116626  111343
    100000  400000     9.0       43504   77558   92227   85332


    I've used 6.5% as the interest rate in the first three sets. Although I'm currently paying 5.21% on a pro package, it's unrealistic to use this number for a comparison based on 20 years into the future. All sets are based on a rental income starting at $400/week and increasing by 5% pa.

    The first set shows the numbers for a 400k loan at 6.5% interest. It shows that you are ~65k better off after 20 years with a 100k wage compared to a zero wage, but this difference is much more dramatic for the 9% interest used in the final set, where you are 150k worse off with zero wage.

    The analysis shows that for a zero wage, the only way you'll be on a par with someone on a high wage is to pay off a substantial part of your loan. The second set shows the data with a 300k loan, and the third set with a 200k loan. Even with the 200k paid off, it takes about 15 years before the person on zero wage is better off than those with an income, eg a person on zero wage is about 9k better off than someone on a 100k wage after 15 years.

    The lower the interest rate, the less dramatic the difference, but you're certainly behind the eight ball if you don't have at least a 15k income, unless you can kill at least half your loan.
     
    Perhaps I'll buy my next house in my name after all, perhaps in another state with another land tax threshold.

    Profile photo of fishngymfishngym
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    @fishngym
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    Yes Linar,

    I absolutely agree. In QLD, the spousal transfer duty exemption is only applicable when transferring the title into joint tenants or tenants in common 50/50.

    It will not be applicable when trying to remove a name completely.

    Profile photo of cash flow pluscash flow plus
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    fishngym wrote:

    Yes Linar,

    I absolutely agree. In QLD, the spousal transfer duty exemption is only applicable when transferring the title into joint tenants or tenants in common 50/50.

    It will not be applicable when trying to remove a name completely.

    What about from 1 defacto of over 10 years who is working to the other defacto who is not working.

    This is on an IP which has now become unencumbered so has lost its tax advantages to the worker and owner, so want to tranfer to the one who is not working to minimise tax.

    CF+

    Profile photo of fishngymfishngym
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    @fishngym
    Join Date: 2008
    Post Count: 49

    Sorry CF+, I wish the OSR was that understanding of our financial needs.

    There may be other strategies out there for you but unfortunately the OSR will slug you duties if the property does not become 50/50 ownership upon completion of the transfer. Your relationship of 10 years will support the definition of defacto/spousal relationship but will not assist you for any further discounts.

Viewing 13 posts - 21 through 33 (of 33 total)

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