Hello. I had posted this on another forum too. Just wanting some advice.
My brother and I own an equal share in a property. I apologise for my ignorance here, as we purchased this when we were very young, and haven’t had any problems so far, but are now looking at the best option to manage our investment and best interest for the future. Currently it is a joint tenancy but we are changing to tenants in common. We didn’t originally understand the difference between the two.
We rent the property out and had planned to continue to do this and eventually split the rental income from it for the future. we both have our own families now and there is no rush to change things, but just wondering what our best options would be to get the most out of our investment so far. we purchased originally for $300K and it is now worth $600K.
I know we have the option to sell this and split our profits if we ever need to. Or else we were thinking there was the option of using the equity to purchase another property and then eventually we could transfer the names and ownership of each property so eventually we will have one each. I understand there would be stamp duty implications and possibly CGT?
we havent yet seen a solicitor on this but just thinking top line now before we do investigate further so we can kind of have a plan of what we intend to do in the future.
My brother and I have a great relationship as do our partners. It is the distant future I am more concerned about and if we did continue to hold onto the property jointly as it is now what would happen eventually once we are gone with then splitting the property up between different children and families.
sorry for the rambling but just wondering if anyone has any insight and if we did eventually have two properties how would we fairly take over ownership of two different properties that would be in different areas, values, have different sized mortgages etc.
I have posted on another site too, any insight would be greatly appreciated.
Thank youThe problem in the future may arise if you want to invest further. Even though you both hold 50% share, when borrowing the bank takes into account the whole loan. So this will reduce your borrowings.
If you buy another property- same applies. Yes- If you wish to transfer the names it will incur stamp duty. CGT depends on structure, purpose etc.If you intend investing you may be better off selling and buying individually.
Perhaps just let this one pay itself off may be the ‘best’ option. As the LVR is about 50% it won’t be hurting serviceability too much.
Borrowing further against the property will make things messy in terms of working out who gets what. I have clients who do this and increase the loan and then use half each for further investments in own name. If you do this the borrowing capacity will be hurt – but it may be convenient to get your hands on more deposit money.
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
Thanks very much for your replies
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