Selling My 50% Share In Home to My Brother

Hi guys,

I was hoping to get some advice...

My brother and I bought our home a few years back. We went 50-50% on everything so far.

The house is worth ~ 700k now. We've agreed on a price point for me to sell my share of the house to him. However, we can't justify paying stamp duty of approx. 27k to transfer the title to just his name. CGT would not apply as it's been our PPR.

His plan is to live there for another 2-3 years and then lease it out and hold for cash flow over the long term.

I don't want this though... I am keen on moving in a different direction.

If you were in my shoes, how would you best approach this scenario?

The current plan is to draw up a contract outlining our agreed sale - price, payment terms, responsibilities, etc.

He understands that I would technically still own half the home (on the title) but the contract would outline our personal agreement (in case of any future dispute). Likewise, I'd have to remain on the mortgage which puts me at risk if he ever defaulted. I'm not too concerned with this though as he earns great money and is pretty responsible.

Any tips would be great!

Thank you

 

14k each is still quite a lot to fork out, though I do get your point... it's something we've considered.

If we did transfer the title, I actually don't think he'd get approved for a mortgage of that size on his own. He has a partner that doesn't work right now (at Uni) and a kid on the way, plus a large mortgage on an IP he owns 50/50 with my sister (for servicing purposes, he'd be liable for 100% of that mortgage too)

 

Doesnt sound like there is even an option to transfer title if your brother cant get the loan to pay you out?

can you buy him out instead?

 

I'm just assuming he can't - I haven't done the calculations properly yet.

No, I can't buy him out right now, nor am I interested in doing so in all honesty.

Any thoughts on moving forward with a contract between the two of us, and then later down the track (12-18months from) possibly transferring title and paying stamp duty? (I understand this may mean a higher valuation thus higher stamp duty)

 

Some banks can apportion debt with a stat dec.

 

not sure how this results in you moving forward? Your still on the mortgage and title. Its like a sale with a long settlement. Until it settles your still on the hook for everything.

how about just selling it?

 

I would sell, but he doesn't want to... hence he wants to buy my share

The contract allows me to get out, do my own thing for time-being, and then pay stamp duty in 18 months or so, rather than now... yes, in meantime i would stay on title + mortgage

 

how so? The contract doesnt increase your borrowing capacity.

 

How can he do that without the affordability to do so?

 

Correct. I'm not going to be buying any time soon though, so not looking to borrow... just looking to cash out. I will no longer be paying the mortgage either... that's me getting out. On paper, I realise I am still liable for the mortgage though, but in reality, I will not be making payments

 

In about 18 months his partner will be employed FT so servicing shouldn't be an issue

 

• Stamp duty is the purchaser's responsibility (ie not your cost unless they're going to chip in for half on your next property). You have already paid stamp duty to purchase in the first instance.
• The amount of your brother's purchase is half of the market value of the property, $350,000 (not $700,000), so the transfer duty is around $11k.
• You could sell your half on an option - ie nominated date (which you could probably vary), price agreed (for some time in the future), the date for the option would be when your brother would be able to get a loan in his name/wife's names.

 

That's good to know! 11k is definitely much more doable

The option sounds like a good way to go... any recommendations on who I should speak to for more info?

 

I'd suggest speaking with a property savvy solicitor (not a conveyancer or run of the mill local solicitor) so they can provide specific advice (they may even suggest two different solicitors, one for you and another for your brother as you both have different objectives/needs for advice.