Legal Tip 68: Avoid 99%/1% ownership of property

Discussion in 'Legal Issues' started by Terry_w, 25th Aug, 2015.

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  1. Paul Joice

    Paul Joice New Member

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    Ok thanks - so essentially it may provide some protection but it's not bulletproof - it will come down to how hard your creditors go after you and the judge's opinion?
     
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  2. hash_investor

    hash_investor Well-Known Member

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    One reason could be to claim the maximum tax deduction for the spouse on higher income and when its time to sell transfer to the other spouse. If they are already on the title there could be no or minimum stamp duty.
     
  3. Terry_w

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

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    There would be no real stamp duty benefit - other than saving 1% of the duty. would be very similar to not being on title
     
  4. Terry_w

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

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    Another disadvantage is where the owners later do a spousal sale.

    If X and Y own 99/1 and later Y buys 49% off X so they are 50/50 owners the ATO considers the interest wouldn't be deductible on any increased loan. Whereas if it was 100/0 and went to 50/50 the extra interest would be deductible
     
  5. hash_investor

    hash_investor Well-Known Member

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    Sorry @Terry_w didn't understand a thing. Why would that interest by deductable if owned 50/50?
     
  6. Terry_w

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

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    Another point worth considering is if an asset is owned as tenants in common in eqal shares it can be converted to joint tenancy without triggering CGT or stamp duty. Where it is held other than as equal ownership it can still be converted to a joint tenancy but it would trigger stamp duty if property and CGT too, unless the main residence exemption applies.

    This might be considered for estate planning purposes