Hi,
I have been trying to sell a negatively geared property for 6 months on the open market now with no success. Its currently rented as a short term holiday cottage, and is priced very well, however the town is very small in a serious property slump.
My father loves the place and would use it as a holiday house and also has future plans to further develop the block. He has offered to buy half of the place, which would work quite well for me, as I could also continue to use it as a holiday house, with half the expenses that I currently pay, and lowering the debt against it.
I am very cautious of family-business ventures, and was wondering if other people have any advice on what needs to be done to complete all the legal and accounting stuff, to make sure all bases are covered and no-one gets bitter.
Thanks in advance for any suggestions.
It's fine as long as you discuss your future plans and you are on the same page. E.g.
- How long to keep it?
- What happens if one person wants to sell?
- Who is paying what?
The most common situation that I have seen where there has been trouble is where one person wants to sell, the other wants to keep it… but doesn't want to buy out the other party. If you have an agreement up front that if one wants to sell then the other has the option to buy out their share, otherwise the property will be sold.
Your dad will likely pay stamp duty on 50% of the value of the property just FYI. Not hard to do the legal stuff, just a transfer document any conveyancer can do.
Best to seek legal advice – from a lawyer – as there are many issues related to this.
Then talk to a broker about the lending issues – the effect on borrowing capacity etc.
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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