Hi
I am currently in an investment property partnership and the time has come where the other partner wants out. We cannot come to an agreement for a buyout price (even after having 2 x licensed values and 3 market values) the other partner wants more money than all these values which I am not willing to pay, but I want the house. So it may have to be sold. Can I purchase the property from myself once it goes on the market? and How?
Hi Wirraway.
Can I purchase the property from myself once it goes on the market? and How?
Yes, you can purchase the property yourself. Remember, the property in question is under multiple names with Lands Title Office so they're only interested in that the correct contractual 'sale of property and forms' have been met to transfer the existing Title into just your name, and the prescribed govt fees and conveyancing discharges have all been met.
HOW? I suppose this is the $64 question. You both must agree to a minimum selling price to place the property onto the market. My suggestion would be to agree to a minimum selling price and agree to sell via auction to 'test the water' on price. You could then draft a 'Limited or Specific Power of Attorney' document to someone you trust implicitly (like a sibling or lawyer, accountant) and get them to bid for the property on your behalf at Auction. This same principle could be applied to a Private Treaty sale as well.This will allow the property to be sold and transferred to you with your partner being none the wiser!
I trust this has been of some help to you?Thanks Anthony! I have been told by others that I would have to set up a trust/business to purchase the property, is this not the case?
Just a question, if you could buy it from the partnership, wouldn't there be a lot of fees that would have to be paid? Stamp duty, attorney fees? Probably a few other things I am not thinking of at the moment. Just seems like it may be cheaper if you could transfer the name on the title instead of just buying it off the partnership?
Yes i agree, but unfortunalely this property is now a defacto property settlement where the other party is being difficult. It seems the only way to satisfy the other partner that they are not being 'ripped off' is to put the property on the market – The Licensed Valuations and Agents market values have not convinced the partner of an appropriate price leaving the partner believing the property will sell at a higher value. When in reality, selling in todays curent market will take longer and cost more, but I, as a buyer will be paying less for the property than valued, and the partner will be at even more of a loss, if that makes sense.
So for me to purchase a property off the market that I am selling to break partnership – Do I have to set up and purchase through a business name?If you purchase through an entity other than yourself, it is likely that you’d pay transfer costs on the entire transfer not just the half you are buying. It will also trigger a cgt event for the lot as well.
Wirraway,
Scott No Mates is absolutely right. Selling or gifting a property to a trust or company will create a capital gains event however if you are receiving nothing in exchange for your property, you will need to get an independent valuation to provide that the exchange was at arms length basis for tax purposes as you will need to pay CG at the market valuation rate. If the tax that you need to pay is < the price that you're partner is asking for, then maybe it's worth the cost.
Good luck.
Cheers,
Jase
Hi Wirraway,
If the debt burden is not too heavy, carry it for a month or two. I can only assume that by the 45th day your partner (ex), will come to his or her senses about the real "value of the property."
Match the highest offer and say that at least you both get to save on agent's fee. Just so there's no complications or unwarranted accusations that you may be rigging the result in your favour, allow ex-partner to be in charged of the selling process. Let ex be the boss from picking the agent, to the means of advertising, etc.
When signing with an agent, don't sign for exclusive agency agreement. Make sure the agent understands that there is a chance you'd buy the property yourself. When agent and partner say we got an offer for this xxxx amount, ask to see the offer in writing.
If you're satisfied, match it and be done with it. However, there is also a chance someone would offer to buy at the price you can't possibly refuse. Sell it and enjoy the proceeds.
I hope this practical solution helps.
Angelina
Thanks Angelina
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