Legal Tip 115: The Gift and Borrow Back Strategy, Part 1

So the name on the title would change (ownership)? Would this be a CGT event? As applicable state by state, would stamp duty be owed?

 

Depends what you are transferring. If real property then yes it would be a CGT and stamp duty event. If a car then generally not but cars need to be registered so the gift would not be perfected until title transferred.

Cash is possessory title - once it is handed over as a gift title changes.

 

Noted an interesting point from the SRO website
Spouse and partner exemption | State Revenue Office
Note: Transfers of all types of dutiable property following a marriage or defacto relationship breakdown are exempt, regardless of the date of the contract.

its probably illegal and gone too far for just asset protection but essentially a couple can divorce then one party can gift any properties whether PPOR or investment properties (no stamp duty applicable) to the other party and borrow back afterwards provided its agreed upon by both parties in a 'divorce agreement'??

 

The old divorce trick is well known and the laws have been tightened up. Trustees in bankruptcy can be parties to family law proceedings now to get these schemes voided - potentially

 

If for example I have 50k in my offset account. If I gift thus to a trust, then the trust loans this back at 0% interest and the money goes back into the offset, this increases asset protection?

 

Having read through the entire thread, I still don't understand how property equity above first
registered mortgage amount can be gifted in the first place, and then borrowed back via an
equitable mortgage, perhaps registered on the title if required.

Doesn't the gifting require real cash transfers as mentioned multiple times in this thread?
If so, chances are not many of us will have that much cash (equal to amount of equity) sitting
around that can be gifted to a trust and then be borrowed back via equitable mortgage.

The only alternative I can see is borrow to the max from first mortgagee and gift that extra
borrowed cash to the trust and then borrow it back via equitable mortgage. Even with this, not
everyone can access 100% borrowing for PPOR.

Does/Can anyone on PC offer professional advice/service setting this up for me ... well as part of
my estate planning ?

Thanks,
FXD

 

You cannot gift equity. Equity is just value less loan of a property.
You can give cash or tangible or intangible assets.

I can advise on asset protection, estate planning, trusts etc. So can many other lawyers.

 

Here is part 2

Legal Tip 287: Gifts with No Transfer Do Not Work: Asset Protection Legal Tip 287: Gifts with No Transfer Do Not Work: Asset Protection

 

Would the loaning back of money in the contemplated scenario in this thread ever invoke the need to obtain a credit provider licence?

 

Unlikely

 

Re Permewan No 2 [2022] QSC 114
handed down a few hours ago, there was a gift and borrow back transaction in this case which was set aside.