Gift of Property / Change of ownership?

Hello everyone!

I am new to the forums, so excuse me if I've added this to the wrong section.

I bought my first property early 2011, and took advantage of the first home owners grant and stamp duty exemption. I was also lucky enough to have my parents provide me with a "gift", because my borrowing capacity was limited at the time.

I had rented out my property earlier this year, and for tax purposes, I'm making a profit (unfortunately, my interest repayments are less than my rental income).

Anyway, separate to this, my parents put a deposit on an Off the Plan unit last year, which is due to settle in 2 months, but, right now feel they may not be able to make the repayments on this new investment once the ball is rolling as my mom is planning on retiring soon.

I suggested to help pay off that mortgage, but I realised since my name isnt on contract, I'll be paying her mortgage without the interest deduction, AND getting taxed on the net profit Im making on my own property!

I'm not sure what the best option is, but I was thinking if she transferred the ownership in half to me (joint tennants or tennants in common?), I will be able to lower my tax?

Can anyone give guidance as to what is the most tax effective method for me to go about this?

Thank you so much!

 

ownership cannot be transferred without stamp duty or cgt consequeces but if settlement hasnot occured it may be possible to add you name to the transfer before settlement with only nominal stamp duty

 

Have you thought about changing the original 'gift' to a loan and then paying interest back to your parents?

Having a positively geared property is a good thing, many investors wish they were in your position. You could look to buy again and balance your portfolio and tax position if that is a concern. Tax consideration should only be a side issue in the investment equation, not a driver of decisions. By all means take advantage of the tax laws but I see too many people caught up in the concept of reducing tax to the detriment to their overall financial position.

If you do decide to go in with your mum, tenants-in-common would probably be the right wasy to go and if your mum is nearing retirement, you could look at a mix outside 50/50 split with you taking a greater percentage. Also consider if you are borrowing for this, make sure the new ownership can show servicing to your lender as they will want both names on the mortgage.

GregR