Costs incurred when buying out joint tenants

There is a family property held by myself and my 2 siblings as joint tenants, which is now to be sold. I am considering "buying out" my siblings to own the property outright and am just wanting to know of implications regarding taxation, stamp duty and any other issues I may need to consider/be aware of.

 

The amount paid to buy out the other party will form part of your total tax purchase price of the property. This will eventually reduce your capital gains tax on sale. You will more than likely pay stamp duty on the purchase price but it depends on the state and you might enjoy some concessions in very limited circumstances.

 

Stamp duty will be calculated on the value transferred. I don't know of any states with concessions for this.

You will have mortgage discharge fees and new loan application fees (if any).

Conveyancing costs.

It will also be a CGT event.

 

And quite importantly - If the value agreed by the parties (siblings) is not market value a special CGT rule applies which substitutes market value for income tax (CGT) purposes.

What are capital proceeds?

For the sibling who is buying out the other they will then effectively own two CGT parcels of the same property each with its own distinct costbase. I'm just doing a return for clients with FOUR CGT parcels for the same title.

1. 33% share pre-CGT
2. 33% share pre-CGT from Mothers estate
3. 13% share post CGT from his Fathers estate (was originally 33% also); and
4. 20% share owned by spouse which was once part of item 3 but was gifted to spouse at market value. This portion includes duty and legals.

Its just as important to retain good CGT records when dealing with related parties as any other asset.