Transfer of apartment at no cost.

propman1 wrote:

Hi Terry,

Thanks for your reply.
1. The property is in Queensland, so it will be under Qld stamp duty rules.
2. The property is worth around $800k. If she gifts me $800k to buy the property, what are the tax implications for the cash loan?
3. There are no social security issues. She is not entitled to the pension or anything.
4. How do I establish no undue influence. If she goes to her own solicitor (on her own, with no one else with her) is that satisfactory?
5. The tax issues of me renting it later is not an issue for me.

6. “It might be better for you to buy off her at full market value, borrowing to do so, and she can gift you the cash.” Why do you say that??

1. ok
2. loan? loans generally attract interest. Interest received is income. If it is a gift then it is not a loan. No taxes on gifts.
3. ok
4. that is a start, Many other legal issues to consider
5. it could be an issue many years from now. circumstances chage
6. asset protection for 1 thing

You really should get some legal advice as there is a lot you don’t know you don’t know.
6

I know the laws in each state may be different (I’m in South Australia), but speaking from my own experience when my mother passed away and one of my siblings contested the estate, giving away an asset to a beneficiary before you die is the only way to make that gift “set in concrete”. Who’s left what in a will can be disregarded by a judge if a legitimate party contests the will. My barrister explained that the only way to make your will “iron-clad”, as in the beneficiaries get what the deceased wants them to, is to give your assets away before you die, while retaining a “vested life interest” in the assets.

So for example, if an elderly parent gives the family home to one particular child before they die, said child can’t turf the parent out before their death because even though the child would technically own the property, the parent has retained a “vested life interest”.

Other than this reason, I can’t see any advantage to either party for giving away an asset before death.

Terryw wrote:

Pete – good points but you have mixed a few things up. Gifts can be attacked even if they are made before death. This is especially the case with elderly. There are many ways to attack such a gift under the laws of equity. There is also the NSW law of notional estate orders under the Family Provision section of the Succession act. Any undermarket value transfer could be attacked if the transfer occured within 3 years of death. NSW law can apply to people living in other states if they have a connection to NSW.

A gift also doesn’t necesarily mean a life interest. These are 2 separate things. A person can give another person a right to reside in a property until their death (life interest), but they are not directly connected (to the gifting).

Nothing much is iron clad unless you sell the property and spend the money.

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Thanks for the insight on that Terrryw. My barrister didn’t go into any great detail about giving away assets pre-death, given that my mother was already deceased it was pointless, but you’ve given me food for thought regarding the issues likely to arise when my father and stepmother pass on. You can’t pick your family as they say!