Remove a name from NSW property title: Consequences?

What are the tax, stamp duty and other legal or financial implications for this scenario?

Two sisters' names are both on a Sydney property title they have jointly owned for 25 years. Sister A lives there to this day. She is on a disability pension.( The property has never been rented).

Sister B has not lived in the property for 20 years after marrying and moving out. Sister B would now like to remove her name from the title leaving sister A 's name on the title.

Would removing sister B s name from the title trigger: 1: stamp duty 2: Capital gains tax 3. What happens to sister A's disability pension given she has acquired sister B's share of the property? Does it impact on her 'primary place of residence' ( not assessed for her pension) status? Any other advice? Thanks !

 

Removing a ownership interst will affect

1. CGT since B can only possible claim a old period of exempt use. Even if she gifts to A. Market value is generally to be used.
2. Gifting from B to A may affect assets tests for A and could affcet B if she has or may have a age pension entitlement in the next 5 years
3. Stamp duty for A for 50% of the value of the property she acquires based on market value

Contracts would need to be drawn up. This matters requires legal and tax advice. The nature of how A & B acquired their shares may need exploration eg if it was deceased estate and there was a issue with life interests etc

 

When you say 'remove from title' what do you mean?
A transfer of beneficial ownership will trigger duty, be a CGT event but a change of legal title without a change in beneficial ownership won't.

Is the property mortgaged? If so a new loan application would be needed if title changes.

 

The property is not mortgaged. Can sister B retain 'beneficial' ownership by declaring she paid for half the property and it was her place of residence for a time, AND now remove her name from the title? So this would not trigger stamp duty or CGT ? Thanks again. much appreciated!

 

Get some legal advice. Does she want to transfer her beneficial interest

 

Not necessarily . But agree we need to speak to a legal expert!

 

If not what is the purpose of the transfer?

 

Sisters A&B bought the property together as it was more affordable. But 20 years on for B it would be counted in an assets test( eg pension). B has not made a capital gain, the property has never been rented and no sale of her 'half' to A has taken place. Therefore she wants to know if removing her name is possible without incurring huge costs ( SD, CGT) - that neither can afford due to their financial situations.

 

Remaining beneficial owner will mean it counts for the assets test

 

So leave beneficial ownership, but change title and this won't trigger costs CGT, SD . And, note to self - get advice from expert too.

 

That won't achieve much.

 

Removing a owner is a transfer of legal title. Market value is used. The question to ask is - what will it cost ?

Legal fees, duty, CGT and impact on pensions etc. Asking on a forum is bound to end with concerns. Its likely something to seek legal, tax and pension advice on. Before acting.
A capital gain isnt concerned with rental income. If B hasnt lived there then its a taxable event as a main residence exemption only applies to A (based on market value) who isnt selling so A wont have a CGT issue but B will and understanding this issue would be wise as it is just one potential cost. B doesnt have to receive money to have a CGT issue. CGT doesnt just apply to a "sale". Ceasing to hold a legal interest is sufficient.