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Gifting Property

Discussion in 'Accounting & Tax' started by albanga, 15th Jan, 2016.

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  1. albanga

    albanga Well-Known Member

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    As per topic what are the key considerations here?

    My best mates wives uncle wants to give her and sister a home he owns (single, no kids, well off). The home has been an investment its entire time purchased for around 200k, now valued around 800k.

    What is the best and most cost effective way to transfer the title?

    Secondly to this though he said he would like to see it developed (don't ask me why). He cannot service the development so wants to transfer the existing property and then the two sisters fund the development.
    Not sure that makes any difference as I'm sure the CGT will still remain once the land is developed.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    The transfer will incur stamp duty at market value, so it's not free.

    It may also trigger CGT.

    It may be a cheaper option to consider a JV with each party in a jv and the uncle contributing the land.
     
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  3. albanga

    albanga Well-Known Member

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    So if they transferred it and paid the stamp duty then the uncle would not have a CG to pay (he has made no money).
    Obviously if they sold it straight away though the CGT from when he first purchased it would carry through. I couldn't imagine this not being the case or else everyone would be doing this to avoid CG.
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    The nieces would pay cgt on a very low base. Accountant would have to advise on the uncle's situation.
     
  5. BennEznElle

    BennEznElle Well-Known Member

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    The uncle would incur CGT, like stamp duty, when transferred between related parties, deemed market value applies. Which would mean, even though he received no cash he would be up for a fair whack of tax, unless of course he bought it pre 1985.
     
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    There are also Centrelink gifting / asset rules which could bite the vendor and the recipient too.