Can i sell to my own daughter?

Discussion in 'Investment Strategy' started by virgo, 9th Apr, 2019.

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  1. virgo

    virgo Well-Known Member

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    Say you have an Investment property worth $800K; you bought it years ago for 400K;

    and you are not very happy paying land tax...getting rid of it would means bringing your portfolio down and lesser land tax ...

    Can one sell it to one's only daughter for 400K or maybe 500K ?

    That way one doesn't cop too much capital gains tax...land tax is reduced...and daughter gets foothold into property game:p....

    Who is the one who will spoil this strategy for me?:D
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Stamp duty is payable at market value - so you will need a valuation (or a couple of market appraisals from an agent) to justify the dutiable value.

    If she buys it cheap and it's an IP, then the capital base will be low. When she sells, she will pay more in CGT.
     
  3. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Hi @virgo

    I believe for tax purposes you may have to take the actual market value rather than the reduced sale price, so CGT will still be an issue.

    Your tax accountant would be able to confirm.
     
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  4. Sackie

    Sackie Well-Known Member

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    How much you asking for her? Is she positively geared?
     
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  5. virgo

    virgo Well-Known Member

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    Hmm....what is market value??:D

    Terrible Sydney market atm...and i am a desperate seller (to my daughter :):))
     
  6. virgo

    virgo Well-Known Member

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    Sorry Sackie...the fact is that if you are even asking...you probably can't afford her...:p

    Now go slink back to that hole you came from :D
     
  7. Propertunity

    Propertunity Well-Known Member

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    Not just one but two: OSR & ATO :)
     
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  8. Scott No Mates

    Scott No Mates Well-Known Member

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    She might be motivated but positively geared? Like nice cars, a depreciating asset even if you pump it up with fillers to keep the looks. :eek:
     
  9. virgo

    virgo Well-Known Member

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    And all this while, i thought Sackie was referring to my Investment Property!:p:p
     
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  10. virgo

    virgo Well-Known Member

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    Spoiler to the party... Propertyunity!!! :p

    Look..i am not saying i will not pay OSR and ATO...but seriously folks..i am sure you have come across properties being sold 300K below asking price?:D

    Who is to tell me i can't sell to that nice young family at 300K below asking price?
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I will.

    1. OSR will require a valn for a non arms length sale and based duty on market value
    You daughter will be up for stamp duty based on this
    2. You will pay CGT based on market value too. The market value substitution rule applies
    3. Can she get finance ? Its treated as a sale. New finance is a requirement.
     
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  12. Sackie

    Sackie Well-Known Member

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    Fine! no offer for you. Try to help out a fellow pcer and no gratitude. :p
     
  13. SatayKing

    SatayKing Well-Known Member

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    It doesn't take long to get to the gutter.

    However, I have to admit I initially read the title without "to" in it and was curious as a result. :oops:
     
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  14. virgo

    virgo Well-Known Member

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    Thanks Paul!

    1. Does the solicitor or conveyancer have to report it is a non arms length sale? If not, i am happy to cop the stamp duty

    2. What is this Market Value substitution rule?
    3. She can get finance ..no problem:p

    Surely the rich people have been transferring assets to their heirs NOT at fair market value???:)

    Maybe their accountant is not Paul!!:confused:
     
  15. TMNT

    TMNT Well-Known Member

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    Geez, i need therapy

    read the title as "can I sell my own daughter?"
     
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  16. devank

    devank Well-Known Member

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    I wouldn't. Why do you want have a lower value recorded on your property?
    Also, why mess with legal stuff.

    This is what I would do. Sell her at 100%.
    Get loan for only 70%. Property should be neutral cashflow.

    Give the 30% as interest free loan. It'll be her's eventually. I doubt anyone question this when you go into a retirement home when that happens.
    But, get her to pay your power bills instead :cool:.
    Use the remaining 20% into shares.
     
  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What happens if you do an under market val transfer and
    A. You die
    B. She dies
    C. Family law separation of daughter
    D. Bankruptcy her
    E. Bankruptcy you

    Also deductibility of interest is a major issue.

    You would be better off selling it for top market value
     
  18. virgo

    virgo Well-Known Member

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    Oh ! How clever Devank! i Like it:D

    But what do you mean by "remaining 20%?" please?
     
  19. Scott No Mates

    Scott No Mates Well-Known Member

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    70% loan, 10% deposit leaves 20%
     
  20. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A contract will be needed, stamping is based on the transfer form. I suspect you are looking this incorrectly. ALL the matters a normal sale needs are required for a related party sale The buyer pays the duty. I would suggest you discuss with a solicitor for clarity

    Tax law contains the market value substitution rule. The solicitor shuld also explain that. Or you tax adviser. I wouldnt ignore it. They should also explain the legal issues if it is involved (Terry listed some)
     

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