Best way to structure % ownership for tax purposes

Hi Everyone, My Husband and I are looking at purchasing our third investment property.In the past we have structured the ownership as 99%, my husband the sole income owner, and 1% myself,home duties. Just wondering if anyone had other ideas?? Any feedback would be greatly appreciated.Thanks!

 

This is really a legal question.

See my posts in the legal section including:
Legal Tip 68: Avoid 99%/1% ownership of property Legal Tip 68: Avoid 99%/1% ownership of property

 

It totally depends on your personal circumstances - what happens if you ever sell? Who will bear the 99% of CGT liability? Have you discussed this with your accountant & solicitor simultaneously as there are both legal and tax implications to be considered?

 

What tax outcome are you looking for?

Ownership in the higher income earner's name will probably give them more tax deductions whilst the property is negatively geared. It will also mean they pay more tax at some future point if the property becomes positively geared, plus they'll probably pay more CGT when the property is sold. You'd need to get specific advice to model these 'tax' outcomes.

From a lending perspective, there's no benefit to 1% ownership.

 

The 1% issue can be a benefit or not depending on a range of factors
- May limit a spouse from later refinancing without your knowledge
- May impact servicing (or not)
- May affect land tax calculations !! ie If in spouse name only there may be a secondary threshold.
- May affect tax outcomes eg losses may accumulate for the 1% inteerst. Return must still be lodged to carry this fwd etc
- 1% may affect govt benefits and the 99% to spouse may affect adjusted taxable income used by Centrelink for Family Tax Benefits and other benefits

Legal advice is the general approach to address ownership structure. Mortgage broker guidance and tax guidance may also assist.