Moving into an investment property prior to death

Discussion in 'Accounting & Tax' started by thesuperman, 18th Jan, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
  1. thesuperman

    thesuperman Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    404
    Location:
    Australia
    An investment property which has always been rented out since Day 1 which has been moved into prior to death is meant to be tax free, meaning no CGT is due when ownership is passed on. How does this exactly work with multiple owners? Let's say Homer, Marge & Bart own an investment property either as JT or TIC in equal shares. 10 years later Homer's not well at all. Homer (or all of them?) moves into the investment property. Home passes away a few days later. Is the investment property 100% CGT free or only Homer's ownership portion of 33.33%?
     
  2. Terry_w

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

    Joined:
    9th Jun, 2006
    Posts:
    30,842
    Location:
    Australia wide
    Any transfer on death is not a CGT trigger.

    I think you are talking about the cost base being reset to market value.

    Where there are separate owners each has their own interest in the property separate to others. If Homer dies only his share of the property passes on to others
     
  3. thesuperman

    thesuperman Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    404
    Location:
    Australia
    Yes correct. Thanks Terry :)
     
    Terry_w likes this.
  4. thesuperman

    thesuperman Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    404
    Location:
    Australia
    I'm a bit confused about how NSW land tax would work with a similar situation as above.

    Say that Homer, Marge & Bart own an investment property in NSW with $500k in land value either as JT or TIC in equal shares. Five years later Bart goes out and buys an investment property in NSW with $500k in land value being 100% in Bart's name. How does the land tax threshold work?

    Is it for the 1st property 133k of land tax exemption gets allocated per each of the 3 people and for the 2nd property $500k of land tax exemption goes to Bart, meaning that Bart has used up 633k of his land tax exemption?
     
  5. Terry_w

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

    Joined:
    9th Jun, 2006
    Posts:
    30,842
    Location:
    Australia wide
    This gets complicated

    Joint owners are basically considered one owner and then when one of them buys separately this is assessed plus the share of the joint owner with a formula to prevent double taxation.

    I have written a tax tip on this