Buy half PPoR from wife

Hi,

Firstly thanks for all your valuable posts in this forum.

I have the following question and need advise, I have read many related posts but still am a bit confused on how to proceed.

Current situation:

- living in a PPoR renovated unit (borrowed to renovate) joint purchase (wife and I)
- total loan 475K (under my wife and my name)
- purchase price 555K, currently valued about 750K
- wife doesn't have any income at the moment
- I have income about 150K a year

I want to move to another place will rent for now and would like to keep this unit as an investment property. From reading it seems a good idea this unit is only under my name. questions:

1) can I buy half from my wife? I live in NSW so I know I may not have to pay stamp duty
2) what about the loan? can I apply for a new loan for the 80% of the current value?
3) who can provide assistance so I can formalise this transaction?

Also if any of you think this may not be the best approach please advise my experience with this is pretty low.

Thanks,

 

1) can I buy half from my wife? I live in NSW so I know I may not have to pay stamp duty Yes you can.
2) what about the loan? can I apply for a new loan for the 80% of the current value? Yes you can, assuming your servicing works. But why do you want to do this? The increase on the current loan will only be deductible if you use it to buy further investments.
3) who can provide assistance so I can formalise this transaction? Your lawyer/conveyancer can help with the stampduty exemption side, and your broker can help with the loan.

 

1. Yes you can but duty will apply

2. Your wife will be the owner so she could apply for the loan and you could be a joint borrower or a guarantor if she cannot service. New loans are needed because change of ownership.

3. You will need a lawyer or tax agent for the tax advice, a lawyer or a conveyancer to transfer title and a broker for the loan.



You will have to work out the portion of the loan that relates to the property and the portion that does not and split the loan accordingly. An increase of the current loan could be deductible as your wife is buying out your share and borrowing to do so.

 

Sorry you are buying out the wife - so keep her off the loan altogether.

Make sure you can afford the loan for the new place too.

 

Thanks for your replies. This is what I have come up with so far

1) Regarding stamp duty: as this is currently my PPoR I should be able to buy from wife without having to pay stamp duty


2) Regarding borrowing to buy half


At the moment my total loan is 475K therefore my share of loan is half then 237.5K

Place is valued at 750K so I need to pay/borrow half then 375K

Therefore I need to borrow a total of 237.5K (current) + 375K (to pay half) equals 612.5K

However bank will only lend 80% of 750K equals 600K this is no problem I can cover the 12.5K difference


In other words I will end up with a loan of 600K where everything was basically used to buy this place that is my PPoR and will continue to be so for a few months

Down the track (end of the year or next year) I can move out and rent this out, I should be excempt from capital gains tax for 6 years as this place was my PPoR (and only property so far); additionally I should be able to deduct the interest on the 600K as the whole was used to buy the place.

Are my assumptions correct?

 

1. How do you come to this conclusion?



2. Not enough info, but possibly correct.



Have you sought advice on part IVA anti avoidance measures? Legal advice on the implications for estate planning and asset protection etc?

 

1. I was referring to
DUTIES ACT 1997 - SECT 104B
however it seems I may still end up paying 50% duty

2. What info is still missing?

I have not sought professional advise (yet) I'm still doing initial research but will do things with a help of a solicitor (and accountant if necessary). It is not my intention to avoid tax just to structure things in a more efficient way.

 

s 104B can't apply in this situation - see subsection 1(a)

You don't know what you don't know.