All Topics / Help Needed! / FHOG and transfering ownership
A friend asked me a question the other day which I wasn’t sure of. His dad owns a duplex (a PPOR) valued at $400k and wants to transfer ownership to him. As my friend has never owned a home before, would he still be eligible for the FHOG and stamp duty exemption? He lives in Sydney and his dad still has a $200k mortgage on the duplex. I did not want to give him the wrong advice and thought i’ll put the question out here.
Also what is the process on changing ownership of a property?
Thanks,
MichaelHi Michael
The transfer of ownership would be considered a sale of the asset so Stamp Duty would be triggered (course certain exemptions may apply) and possibly CGT for his father.
As long as he would qualifies for the FHOG then there is no issue in him purchasing from a related party however the security worries me as a Duplex implies 2 properties side by side one of which he has rented out. This would not satisfy the FHOG requirements.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard for your reply. His father owns one of the duplex (the other attached property is owned by a young family not linked to them in any way)
Can anyone confirm if CGT would have to be paid from the father being its a PPOR?
From my understanding CGT would be waived as it is a PPOR of the dad’s. And since it is my friend’s first property and he meets the criteria, he should qualify for the FHOG and stamp duty exemption. Please correct me if i’m wrong here.
Under the PPOR exception on CGT- as long as this is your frds father’s primary and only PPOR then it won’t have any CGT liabilities when sold..
Also under the NSW FHOG rules for “one arm length” transactions- a independent valuation authorized by the OSR needs to be carried out to make sure the selling price is within the market for stamp duty purpose.
Regards
MichaelMick C | Shape Home Loans
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Apologes Mike i thought your father owned both sides of the duplex.
No there will not be any CGT implications if the property is his owned as his PPOR and your friend will qualify for both the FHOG and the Stamp duty exemption based on the fact he intends to occupy the property.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Property would probably be CGT exempt if it has been the main residence from the start and never used for income producing purposes or was it possible for the dad to claim the interest on the loan. eg. not used as an office or rooms rented out etc.
Another condition is that the land be under 2 hectares.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:Another condition is that the land be under 2 hectares.Ohh interesting…. i alwasy learn something new from Terry everyday
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Michael, in relation to your comment about doing an independant valuation for stamp duty purposes, would that be required since it is exempt anyway as a first home buyer?
Also, I believe the duplex was rented out for a year (in 2009?) since purchase back in 2003 (for 250k or so). Any idea how this would affect CGT?
lykemike wrote:Michael, in relation to your comment about doing an independant valuation for stamp duty purposes, would that be required since it is exempt anyway as a first home buyer?Also, I believe the duplex was rented out for a year (in 2009?) since purchase back in 2003 (for 250k or so). Any idea how this would affect CGT?
The FHOG exemption only applies up top purchase under $500,000, pro rated for anything over 500k -and once it goes over $750k there is no exemption., hence the reason for the valuation to know what the “true” value is ..rather then a discounted family sell price.
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The CGT will be pro-rated based on number of % as an PPOR.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Thanks so much for everyones input. Will be passing on the helpful information to my friend.
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