I have here for you readers a case that requires your opinions .
The location is St Kilda/Melbourne: 2 storey house on one title.
The ground floor and the upper floor has their own private entrance and the house until now was owner occupied and shared by two family members:mother and daughter.
Since the mother passed away the daughter who is a benifeciary would like to keep living in the house on the upper level and is looking at ways to do so.
Keep in mind that she also have a sister living elsewhere who is entitled of half the value of the house and might want to cash out.
The remaining debt is around $150000 and the value I believe around $ 2.5M .
Does anyone know if there is any legal reqirements to rent out the self contained ground floor with private entrance, without expensive set up cost?
How do you go about getting two units in this building so the ground floor could be sold and what cost would be involved to do just that,not including the sale cost?
I would appreciate your opinion so I can help this friend.
Is the self-contained ground floor currently billed separately for electricity, gas and water? If not, then the only way to get a tenant to pay for these services is in an "all-inclusive" rent. If renting the place out, your friend will want to have an awareness of the decision this impact has on Capital Gains Tax should she ever decide to sell.
If you want to sell the ground floor flat, the services will absolutely have to be split, and this comes at a price. Has your friend had a chat to the local council building & planning department about her options, and the likely associated costs?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
That's an interesting conundrum!
The most obvious way is to strata title the two "dwellings" so they are each on separate titles. The costs for strata titling are not expensive (say $10,000) but there are other costs for compliance that can add up to a healthy bill – things like fire separation and noise attenuation to name just two. There are other issues like parking, services and the like to consider as well. The end value of the newly titled dwellings will determine if this is worthwhile financially.
In terms of the family ramifications, it may be best for the daughter to arrange a sworn valuation "as is" in the first instance, come to an agreement with her sister at that point and based on that valuation, then strata title (subdivide) and use the proceeds of sale from one of the newly titled dwellings to pay out the mortgage and settle with her sister as per the agreement. Alternatively if the sisters are willing to share in the expenses and legwork involved they might also share in the upside of the arrangement.
Thank you jac and christian.
Your comments were very helpfull and I will pass them on to my friend.No worries, I hope it works out well.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
