Legal Tip 111: Ways to Structure Joint Ownership of Property

Discussion in 'Legal Issues' started by Terry_w, 2nd Jan, 2016.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes
    And name on title doesn't necessarily define who can claim interest.
     
  2. S0805

    S0805 Well-Known Member

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    That's interesting. I thought name on title is key for tax deductibility. Terry, any examples you can give where this doesn't apply?
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    A trust for example, or a partnership.

    Another example is where there are 2 on title with one paying cash for their 50% and the other using separate security owned in their name only and borrowing to pay their 50% with them borrowing but not mortgaging the property being bought.
     
  4. S0805

    S0805 Well-Known Member

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    Terry, excluding Trust & Joint partnership from this scenario.

    ^ from your example, consider only 1 name on title and 2 name on loan. assuming both people on loan borrowing the required amount together to suffice the servicability (80% of property)....Isn't it that from tax perspective person on title is liable for all tax situation for subject property.....or wat's the benefit of doing that....

    Or am I getting confused with 2 people on the loan vs. 2nd person going as guarantor on loan...
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If the 2 are spouses the ATO will generally allow the person on title to claim all the interest - but this is based on one paragraph in a TR. It wouldn't hurt to have a loan agreement drawn up to have the non-owner spouse lend their share of the borrowed funds to the owner spouse.
     
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  6. StueyW

    StueyW New Member

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    Hi Terry_W,

    Thanks for the thread and your feedback. I hope you can assist me on a bit of a different "joint owenership" idea I have in my head.

    I want to investigate the possibility of purchasing a large parcel of land for recreational purposes (in the NT). I would be looking at trying to get a number of like minded people (50-100 people) to invest in the property and have the whole property available for all investors to access for recreational purposes. From the original post, a fixed unit trust might be an option, but would a company need to be created with all investors identified as stakeholders with equal shares?

    What other factors should I be aware of before delving too deep into my dream?

    am going in way over my head so anyones assistance is greatly appreciated.

    Cheers,
    Stuey
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Stuey

    You will have to get paid legal advice on this as very complex. You have to consider the corporations act requirements for managed investment schemes etc

    Expect it to be expensive!
     
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  8. Peter P

    Peter P Well-Known Member

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    Hi Terry, this is more of a tax question related to ownership.

    An investment property is owned as JT. During their investment journey, they pull out equity in a LOC. The couple now want to alter tenancy from JT to TIC in equal shares for purposes of asset protection, estate planning etc. This will incur bank fees, solicitor fees etc. How should this be funded? Funds from offset or LOC?

    From my understanding, this process of JT to TIC does not help in generating an income from the investment property, so it should not be tax deductible? Correct me if I'm wrong.
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    For tax purposes a JT is considered TIC in equal shares. So there would be no change in beneficial or legal ownership if 2 JT owners end up as 50/50 owners.

    The change in ownership would be a capital expenses.I have never thought about this before but you probably could borrow to fund it and claim the interest if the property is rented out.

    You might have to seek a private ruling on this.
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If you borrowed to pay for it could the interest be deductible?

    If the property was rented out then it probably could be I think as these are capital expenses relating to the property.
     
    Peter P likes this.

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