Hi,
I am a defacto stay at home mum.
My name along with my partner's is on the family home.
My partner has other assets.
I have no income.
I want to build a duplex.
Sell one and give the other to my daughter – 25, who has never owned a property and does not work (centerlink entitlements).
What is the best way to structure the land purchase and the building and selling to minimise tax.
If it is lucrative I would like to undertake further developments.
Thanks, and look forward to hearing from you.Regards Fiona
It depends. You could do it in your name and then there would be CGT and stamp duty on the transfer to the daughter.
Or you could use a trust and then just let the daughter take over the running of the trust when you wish – the only trouble with this is it is a trust asset and therefore no CGT exemption. But CGT won't be payable as there is no sale (though it would be payable eventually) and there would be no stamp duty either as there is no transfer.
Either way it could effect the centrelink entitlements. But if you keep control of the trust it may be able to be set up so she gets even more entitlements by claiming rental assistance because the trust makes her pay rent – you could gift her the rent money maybe.
The downside with the trust is there may be more land tax payable and there any losses will be trapped in the trust.
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
If it was my daughter I’d go the trust route.
You obviously want your daughter to “keep” your gift whatever happens. Sadly, without a trust there is a way she could lose part of it.
Examples:
1) She gets sued (maybe by a tenant); or
2) She gets married and then a few years later gets divorced.Again, sadly the second scenario is not uncommon these days. Setting up the trust now before there is any hint of a marriage is perfect timing because once she’s married, gifting a property via a trust will raise all sorts of questions from the husband (its a mine field)
Good luck
PS The reason I put “keep” in quotes is that she’d control the assets in the trust without ever owning it. If she doesn’t own it, she can’t ever lose it.
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