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50/50 or 95/5 tenants in common

Discussion in 'Accounting & Tax' started by TFE, 23rd Sep, 2015.

  1. TFE

    TFE Member

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    Hi,

    We have just gone unconditional on our first IP in brissy. I am now trying to work out the best way to go for tax purposes.

    I earn around 170k a year, and my wife earns around 120k. My accoutant has suggested we just do a 50/50 split as we both earn good income and if we sell in the future (not planning to) this limits CGT. At the moment the property will be negatively geared as gross yield is only 4.6%.

    Now in around 5 years time I could potentially get a promotion which could see my income rise to around 250k a year. We are also not planning on ever having children although of course my wife could change her mind very quickly on that one hah!

    Basically I have come up with the following Pro/con list for a 95/5 split. Is there anything I've missed or can anyone offer any suggestions for our situation?

    Pro

    Interest rates will rise
    My income will rise
    Lisa may stop work in future
    Unlikely to be positively geared soon

    Con
    Higher CGT
    Might be positively geared 10 years time

    Thanks in advance!
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  4. pinkboy

    pinkboy Well-Known Member Premium Member

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    If you have gone unconditional, then there is no way to change whatever entity was written on the contract, unless you pay a second lot of SD.

    What Name did you put on the contract? Just yours? You and your wife? Unless the split is on the contract, the question is far too late.

    pinkboy
     
    Marg4000 likes this.
  5. TFE

    TFE Member

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    Hmm that's a shame, I did mention to our broker about purchasing in my name only but she did give me a reason why we couldn't.. I just can't remember what it was. Well I guess you live and you learn. I will go 50/50 on this one and try and get the next one in an individual's name.

    Cheers
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    With spouses what is on the contract and what is on the transfer can differ without stamp duty being incurred. Not too late.

    Check with your lawyer as will vary from state to state.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Your broker has given you a bum steer - if it is for servicing reasons she suggested this she probably doesn't realise one can be on title but both on the loan.
     
  8. pinkboy

    pinkboy Well-Known Member Premium Member

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    Said IP in Brisbane.

    Qld doesn't have the luxury as say Victoria.

    If you read the OP post in full you could actually give the correct advice.

    pinkboy
     
  9. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Its not a good idea purchasing properties in joint names as this impacts future servicing. Most lenders with the exception of AMP and St George will take the full debt against the individual and only a portion of the rental income.
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I stand by my comments above. Not sure why you think I was incorrect and not sure why you mention VIC?
     
  11. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Probably thinking of the spouse to spouse transfer exemption but I know what you are referring to Terry. Different issue. Great example of why its important to use qualified advice rather than stuff you read on a toilet wall - You don't know who wrote it. Terry proposed a real solution without duty. It just involves legal assistance so the duty triggers don't occur.
     
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  12. Wandercro

    Wandercro Active Member

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    We also recently bought in QLD. Exchanging in a couple of weeks. We are also in the same boat as to the ownership split. Our lawyer told me we have until the day of settlement to make a decision on the split.
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It has to be specified on the transfer so really you need to de ise a week or so before settlement.
     
    Perthguy likes this.