All Topics / Finance / Joint tenants to single owner

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  • Profile photo of slepaxslepax
    Participant
    @slepax
    Join Date: 2011
    Post Count: 2
    January 12, 2011 - 6:58 am

    Hello,

    This is more of an accounting question but I hope you can still help.

    My wife and I both own an IP with 50/50 share. We would like to change ownership so only one of us is the investor with full owenrship. If the IP is estimated at $600K and we currently have 50% mortgage left (i.e. $300K), what would we benefit from changing ownership in terms of funds becoming more available (other than negative gearing that is).

    If I understand this right so for example if I buy the property from my wife, I then have to take an additional mortgage of $450K and make payment of that to my wife. Then my wife pays $150K to the bank (to cover for her share in the mortgage) and the rest remains available to her?

    Would appreciate your help in understanding this.

    Thanks!

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856
    January 12, 2011 - 7:31 am

    Can you explain it to me like I was a 5 year old?

    You would lose on stamp duty/transfer, capital gains tax, land tax threshold etc to save some tax?

    You will need to prove to the bank it is worth $600k

    Profile photo of slepaxslepax
    Participant
    @slepax
    Join Date: 2011
    Post Count: 2
    January 12, 2011 - 11:57 am

    You are right, but this is still worthwhile because:

    – The property has only recently became an investment property, so CGT would be marginal if any.
    – We would have to pay only half of the stamp duty, because only 50% of the property is being sold.
    – The bank shouldn't be an issue as well, because the bank already knows how much the property is worth (there is a loan on the property already). Due to the nature of the transaction the property will also be valued by the state, and the bank should definitely be OK with that.

    Save on tax is only an added benefit, the main purpose of this exercise is to claim the funds previously paid for in the mortgage. The question is how much are we going to be left with eventually, because the calculation is not that straightforward.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    January 12, 2011 - 8:52 pm

    Its worth looking into as it can free up cash which can pay down non-deductible debt and this will save you tax long term which will hopefully make up for the stamp duty costs.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 4 posts - 1 through 4 (of 4 total)

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