CGT? Parents bought house for kid, how to sell without losing.

Hi,

I need help. My parents bought a house in their name for my partner and I so we could get into the market 4 years ago.

We pay the mortgage and all the expenses related to the house. They haven't claimed anything regarding the property on their taxes.

We are thinking about selling but don't know how or if the CGT will effect us.

We currently owe 337k and the value of the house is between 510-540k.

What are our options?
How do we either get it into our name or sell without losing?
Is there something we haven't thought of?

Any advice would be appreciated.

 

Possibly held on bare trust.

Documentation or evidence of such will be the key

 

Sounds like your parents own the property. Have they lived in it? If not then it is not their main residence so any transfer of title will trigger CGT without exemption.

The only option would be to try to argue the parents are trustees for yourself.
Who paid the deposit? Whose name is the loan in? How do you owe money on it?

obviously no advice was sought before this was set up - this is potentially a very costly mistake which could have been avoided by some cheap advice.

 

Their is an argument it is your house as it is held on trust for you.

Have a look at this private ruling - you cannot rely on it but you have the argument and steps showing what you should consider.

RBA Content

The same argument will apply for stamp duty but you will need to prove your facts again to state revenue.

 

With regards to the formation of a 'trust', was it an intent of your parents to hold the asset at a form of asset protection should things between you and your partner turn sour?

 

If it was it wouldn't have worked.

 

Review TR 2004/D25 do you meet the definition of absolute entitlement.

 

In most family instances they fail to access the benefits of apparent purchaser which renders limits to CGT and duty and profits. In some of the worst case I see parents harmed for Centrelink issues for a further 5+ years

The fact that parents havent claimed a thing seems wrong. You may also have created a tax issue HOWEVER you should seek a good lawyer as there may be evidence of trust ownership in some states. Vic isnt a great state for the issue BUT it would worth considering. The biggest issue is that borrowed funds were used and I suspect the loan is to parents. You will need to demonstrate THEY didnt provide funds...Your money was used. The normal legal process is to document the arrangement at start and then state law may recognise the issue. Its hard to do it after the event

I'm not sure why people think they can "help" someone when they dont get advice. Thank god they arent pharmacists

 

I think when you apply for finance you are required to inform the mortgagee, contractually, if you are acting as trustee. Saying you are not acting as trustee doesn't necessarily mean there is no trust but it may be further evidence of such.

 

That could work out ok ? or terrible. I prefer they are not doctors