Hi Everyone,
Ok so we have a property that we own 50%/50% with my brother. It is in a great suburb with vacancy rates of 0.1% last time I checked. We also live here so I know it is almost impossible to get a rental. Add to that, it is located within 300m of one of Sydney's best beaches, so it has experienced reasonable growth during the last few years.
I posted on the forum earlier that I wanted to use our 50% portion of the equity from this purchase to buy another IP in our own name. Richard from the forum was very helpful in talking us through this but it seems like an impossibility.
After talking to my brother about it he offered to buy us out. Problem is we don't want to give it up and so the thought occurred that we need a longer term plan and exit strategy. I suggested that we should look to use the equity together and buy a second property that is as similar as possible to the current one. Even in the same block if possible as we know it is a good one. What we are hoping is to get some advice on the tax and stamp duty implications if, down the track, we want to effectively 'swap' the ownership eg. so property 1 ownership changes from 'Peach, Matt, Ryan' to 'Ryan' and property number 2 ownership changes from 'Peach, Matt, Ryan' to 'Peach, Matt'. Our aim is to hold on to these properties but to split the ownership so that we have the freedom to use future equity at our will.
Is this a disaster waiting to happen? Any ideas or better ways around it?
Thanks,
PeachYou need a firm planning and which can help avoiding/ reducing taxes whichever comes cheaper with minimal impact on your cash flow. There is alot to consider in your case so won't give you any suggestions without knowing all the details.
Speak to your accountant/ financial planner as they should know your current income and many other personal information which perhaps you won't be discussing openly in this forum.
And if you don't have a financial planner – all major banks offer thius service and they only charge 'pay for service' with 1st consultation free… did I give you some hints. And it won't hurt paying a good tax accountant (if you don't have one) as they will ensure you are saving more then just their free.
Transferring property between siblings will probably incur stamp duty. Also consider that if you borrow in joint names it will reduce your borrowing capacity on other properties as they assume that the entire debt is yours, although you only get half the income.
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