PPOR transfer between spouses - VIC checklist

hi there,

planning to do a PPOR transfer between spouses, currently spouse A owns 100% and plan to do 100% transfer to spouse B. There is high possibility of this PPOR becoming IP down the track and/or could be sold as PPOR/IP. Keeping these possible future scenarios in mind I'm drafting a checklist/process to be followed to make sure i am not missing any critical steps....appericiate any feedback

currently PPOR has 2 separate splits. 200K for PPOR (non-deductible) & 100K (deductible, used for IP deposit in spouse A's name)....steps I can think of in particular order

1) arrange conveyancer to initiate land transfer on spouse A's behalf to be transferred to spouse B
2) Spouse B has no serviceability issues, get broker to arrange loan on behalf of spouse B. arrange new loans to be in structured as existing separate splits (i.e 200K & 100K) both secured by PPOR.
3) Arrange related party loan agreement between spouse A & B where spouse B lends original 100K to spouse A to maintain deductibility in spouse A's name
4) Given PPOR has additional equity created, open another split 50K in spouse B's name at the same time of loan application. 50K to be used for investment purposes later on.
5) Arrange valuation by local RE agent on PPOR for record. (i assume higher is better)

Given, this is PPOR and transferring between spouse in VIC. My understanding on reading number of topics is there will be no capital gain tax payable & no stamp duty (love & affection being in VIC). still to be confirmed with Accountant.

Is any particular steps need to occur before the another...I assume conveyancer & broker has to work together on timing it right. am i missing anything else...

cheers

 

You should get some legal advice and tax advice especially if related party loans.

You dont mention a contract of sale and mention love and affection so it sounds like you wont be able to claim the interest moving forward if the place is rented out.

 

when you mean 'contract of sale' you mean selling to spouse not transferring....is that right. wonder wat's the difference between sell & transfer in this scenario

^^^ 100K split as related party loan you are referring to or entire loan in spouse B

 

You could only claim the interest on money bororwed to acquire an income producing assets. A transfer for love and affection is essentially a gift.

 

Thanks Terry. so when property is being transferred to spouse B it is PPOR and given it is being transferred under 'love & affection' clause it is considered as gift. spouse B is liable for all outstanding loans against the PPOR from transfer date onwards...at the same time can't spouse B make loan agreement with spouse A for for existing splits to maintain tax deduction in spouse A's name....these splits have not changed the purpose of what they are used for just changed the ownership from spouse A to B

I'm thinking will 99% & 1% ownership going to make this easier than full transfer...

 

You should seek legal advice. Why not just sell it at full market value? Mortgages will need to be discharged and new loans aplliwd for anyway.

 

Thanks Terry I will. don;'t mind selling @ full market value. Frankly that looks cleaner option than the other one with related party loans...however it may affect buying our next PPOR jointly keeping serviceability in mind ......might have to reconfirm with my broker

I'm bit confused with VIC stamp duty between spouses looking at their website....seems more complex that initial thought. trying to understand if duties is payable if done @ full market value or not...

 

Look at the law. S43 or 44 of the duties act. It was pretty clear last time i looked.

I also have a tax tip on this topic.

 

Yep in Victoria no stamp duty for spousal transfer. I'd suggest sorting it out with the lender first, and once it's all ready to go, see a solicitor/conveyancer. Essentially there's the transfer and an SRO stat dec to be lodged with the SRO for stamping as "non-dutiable"...then the lender should take care of the rest. If your solicitor/conveyancer charges any more than about $400 (all in) for all this, you need to look elsewhere (and I need to charge more...)

 

is this for monetary or non-monetary value? the SRO guidelines on transferring between spouse from their website mentions 'love & affection' clause only available under non-monetary transfer. OR is it that 'love & affection' clause has nothing to do with stamp duty exemption....

 

Regardless of monetary or non-monetary transfer. I'm yet to zero in conveyancer however my broker has run the numbers and reckon my my spouse is eligible for loan etc...when you say there is a transfer & stat dac, do i need to initiate that and get my solicitor involved .......trying to understand the process step by step....

 

Bigbadbanana sounds like his is a conveyancer. For $400 why not just engage him?

I would also tecommend a contract of sale though. For taz reasons