Adding spouse to Title

I have a couple of properties owned in my name but I'm considering adding my husband to the title for greater tax efficiency. If I do this what impact does it have on any future sale? Can I sell the property immediately after transferring to joint names of selling became necessary?

 

Yes you can sell at any time still, but you would have wasted your time doing the transfer to the spouse and the costs of doing so - conveyancing, new loans, discharge and lodgement of new mortgage, legal and tax advice etc.

 

It sounds like dealing with the mortgage may be the biggest expense, it but it might be worth it if there's no mortgage?

 

what about the stamp duty and CGT? They would probably be bigger

 

The property is in NZ (I should have said). Does adding someone to the title trigger CGT in Aus? Anyway, you're correct it seems cheaper to leave things as they are unless sure that we'll be holding the property for a few more years.

 

Yes would be a CGT event even in Aust. It could be worth doing still, you just have to crunch the numbers.

 

Thanks Terry.

 

Given that the market value substitution rule applies a transfer of 50% to a spouse immediately preceeding a sale would result in CGT for the 50% sold AND when the property is sold the other 50%. The spouse may end up with a CGT loss due to the transaction and selling costs.

I dont see any merits in a transfer prior to sale unless the sale is a long way off. It may not likely alleviate tax and may bring some forward and reset a higher costbase for the husbands half. It may make it more costly and complex. But a refinance of his half (required) could also work to enliven a higher deductible.

The sole merit may be if you expected the future growth to be significant v past.

The NZ rules on investment property may see tax applied to the husbands half if the holding period rule isnt met. The view that NZ doesnt have CGT is a myth for many.
(Residential property)

 

I recently encountered a NZ client who was audited by IRD based on ATO returns. IRD were pretty upfront about it. They said they were checking NZ property sales based on ATO data for NZ compliance, They declared CGT here when the sold after 3 years but not in NZ when the brightline test was not met.

There was also a issue with NZ withholding tax non-compliance but it didnt involve me.

 

Great, thanks Paul. I was aware a transfer would trigger the brightline test in NZ, and also CGT as I'm an Aus tax resident. I think it sounds like too much hassle, I'll just cop whatever tax is coming