Percentage ownership change

I am pretty sure I know the answer cause gov always has hand in our pockets.

But if you buy a place with 2 parties and one owns 1% and the other 99, and then you switch a year down the track, does it trigger stamps and CGT

I want to buy something where I cannot get funds apart from priv money ATM from someone I know well, after approx 12mth I will be able to finance from elsewhere.

Maybe there is a better way to do this apart from give up this opportunity

 

Yes to both unless an exemption applies

 

Thought so, they never miss a trick ! lol

Would be better to then just buy in my name, but keep a legal document showing another person funded the purchase, and that person/s could then also put a caveat if they wish until I re finance.

A legally binding loan agreement should suffice in case it was challenged. As well as a clear money trail/exchange.

 

You could borrow or use a bare trust to transfer title without duty or CGT

 

You will probably find that the bank won't lend to you if you don't have sufficient income to cover the cost, even if you use a third party to be your guarantor.

Disclosure: I'm not a broker, could be totally wrong but just trying to point you to ask the right questions when you do speak to a broker.

 

I really have not looked at trusts at all.

If you went that route, it would remain in the trust forever more, right ?

The CGT would not be an issue, so that leaves stamps, so it is prob better to just have a proper legal agreement that shows third party bought and own/s the place until I return funds.

It would be too costly to challenge too if the property is only a few hundred k.

 

Yeah, that is not the aim here.

It is asset protection, not a question of finance, the finance only comes into it if a third party tries to make a claim, they cannot if it was all funded from another party and it can be shown, that is my thinking anyways.

 

Of course the CGT and duty is proportionate

However, for CGT it is the party disposing and their % interest. So the other acuires a second portion with a new costbase and date acquired. Did the former ownerhave any main residence concession ? However for duty it is asssessed on the buyer. Proportionately. I hope its 1% and not 99%.OSR will require a valuation and use market value. CGT is also based on market value even if the contract says otherwise (assuming non arms length)

They always get their cut.

 

I am not sure you understand the concept. a bare trust is where X owns something but Y is the beneficial owner. It is not 'in' a trust, the trust is just a relationship. Y is the taxpayer still and it is their asset

 

This is not the case.

 

Yes, got it, a formal agreement or document in other words.

 

It would be cost prohibitive to challenge IMO.

I hope this is all null and void soon, but waiting for common sense to prevail can be a futile hope with some.....

 

What sort of money would be required to have a bare trust made up in NSW if it involved a 200k property.

And, I guess you could avoid stamping it, it could be used in court and stamped if it went that far....

 

It may depend how its worded and its authenticity and ability to determine its operative date and source of funds. OSR will typically look at the original source of funds. If X is a bare trustee and Y can demonstrate putting up all the $$$ it is easier. If X puts in the $$$ for their share it may fail. This falls under the apparent purchaser rules. In other words X is a "apparent purchaser" but the equitable and beneficial rights have always been with Y despite legal title in X + Y. Most soliictors will advocate a OSR ruling PRIOR to acting so that the agreement is stamped and held in a drawer or safe for later.

I saw someone take VERY bad tax advice to buy a penthouse apartment worth $20m ++in a company. They later realised how silly it was to lose the main residence exemption when they has no asset protection concerns either. And realised that land tax applied to the proposed new build home. OSR looked at the acquisition and saw that 100% of the CASH was contributed to the company which paid to buy the property. The lender provided evidence they were lending to the company to pay the fitout cost and would lend to MRs X in any entity of her nomination. OSR saw that the company was an apparent purchaser and held the title could revert to Mrs X with no transfer duty. X Pty Ltd was holding the property as a trustee. The hard part was showing the terms of that trust as it wasnt explicit (in writing) so the legal costs were not cheap but were afraction of the duty and CGT otherwise...OSR agreed. The accounting for the sum received in the company etc was supportive. -+

 

I don't think you get it.

 

It depends on the circumstances and what you are trying to protect. If you borrow 20% deposit from someone and 80% from the bank the 20% holder might be an unsecured creditor if you become bankrupt.

If you buy as bare trustee for their 20% you might show you are not the beneficial owner of this 20% so this won't be available to creditors and there is no equity in the property until it grows in value.

 

Maybe not. I have not had to think about this prior.