Joint tenants, subdividing, adding granny flats, deed of partition and loan structure

Discussion in 'Development' started by Peter P, 17th Oct, 2016.

Join Australia's most dynamic and respected property investment community
  1. Peter P

    Peter P Well-Known Member

    17th Apr, 2016
    Hi all,

    Me and my wife own a property in NSW as joint tenants. The property is 1 title with 2 houses on a 1400m2 block in NSW. We want to subdivide the block to build a granny flat behind each house (have checked with town planner and gf builders, given the Ok). Our questions revolve around the legal and loan structure side of things.

    Our intention is to subdivide, enter deed of partition such that I own lot A and wife owns Lot B to avoid stamp duty costs and because we now have our own individual titles, we also have individual land tax thresholds and potential reduce or zero our land tax (we currently paying 2.5k land tax as JT). Then build gfs behind each to increase yield (and start paying down debt!).

    1) When the land will be subdivided, I will own 50% of lot A and 50% lot B and wife will own 50% of lot A and 50% of lot B. For me to solely own A and wife to solely own B we would pay stamp duty, however if we enter a deed of partition we can bypass the stamp duty. My question is, If the land is subdivided such that block A takes 40% of 1400m2 and block B takes 60% of 1400m2, does that mean the person now owning block B is now paying stamp duty bc they own more than 50% of the original 1400m2 land? How would stamp duty be avoided in this case ?

    2) When do we enter the deed of partition? Before or after subdivision? Or any?

    3) Do we have to change ownership to tenants in common before entering a deed of partition?

    4a) What will happen with the loan when the land is subdivided?
    (b) what will happen to the loan when we enter deed of partition?

    5) Are there any negative implications of deed of partition?

    6) Any recommendations who can help?

    Last edited: 17th Oct, 2016
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

    9th Jun, 2006
    Australia wide
    1. I don't think you can avoid stamp duty by entering a deed of partition after settlement.

    2. At purchase

    3. yes

    4. existing loan will need to be apportioned. But if ownership is changing you have some complex tax advice to get.

    5. Yes, stamp duty and CGT

    6. A senior tax lawyer
    Peter P and Perthguy like this.