Hi,
My wife and I own a townhouse and are looking at buying a bigger property to cater for a growing family. The townhouse has been valued by a real estate agent at up to $420,000 and we owe around $240,000. There are 2 main options we’ve been looking at recently:
• Selling my share of the house we’re in to my wife. So I would pay her $90,000 and take over control of the loan in my name for tax purposes. We would then use the $90,000 I’ve paid her as a deposit for a new PPOR. We live in Victoria so I understand there would be no stamp duty or CGT payable.
• Selling our house and using the equity to buy another PPOR. Then in around 6-12 months time look at buying another investment property in my name.
We’ve been told the rent on the townhouse we’re in would be around $350-$380 per week.
Someone has also said that it’s better to sell to my wife in the current real estate ‘market’ because I can sell for the ‘higher’ end of the valuation, instead of selling to someone else for a price that may (probably would?) come in under the highest valuation.
Can anyone give any tips/recommendations on both options?
Thanks!
If your house is worth $420,000 and if you own 50/50 you would have to pay her $210,000 for her share (50%). Borrow $210,000 to do this. Transfer at full market value so you can claim the interest on the loan. Your new loan would be something like $120,000 (your share of the existing loan) plus $210,000 = $330,000 which is 78% LVR.
CGT needs to be considered – wife may be exempt if this was the main residence.
Stamp duty. Generally on the value transfrred unless hte property is in VIC where this may be nil.
Doing this would release about $210,000 in cash into your wife's hands which could be used to pay down the loan on hte new property. Extra interest claimed each year would be about $210,000 x 6% = $14,400
If you sold the house outright you would get $240,00 in your hands after paying out the loan.
This would mean you have another $240,000 which could reduce your new PPOR loan. A loan of $240,000 less would save you about $14,400 per year. in interest.
But you also have to crunch the numbers on buying your wife's share and then property via negative gearing.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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