Hi All, If one uses the govt rules to transfer property in a settlement in family law, but you do not wish to hold for long term, am I right in assuming you should get agreement to sale instead of transfer. i.e sell so both parties pay own tax. The question really is, if transferred and then sold, that party would be up for all the CGT tax it seems, or, is there an allowance so that the second portion, if a valuation is done at transfer, would only count any gain on that portion from the date you became the beneficiary to the sale date.
If transferred pursuant to a family law property settlement it is exempt from cgt generally. But new owner will wear all cgt if disposed over after that
Yes, that's just the way it goes. No. Just because someone gets a valuation done doesn't mean it resets the cost base or has any relevance for CGT purposes. Under the relationship rollover, the spouse who now owns the entire property is taken to have acquired the new share at the date their ex-spouse acquired it and must also use their ex-spouse's cost base. Of course, all of this assumes the property being transferred is subject to CGT in the first place and wasn't the family home or covered by another main residence exemption making it CGT-free
In many cases where A & B acquired a IP then if A & B have a family law property settlement then A may own 100% as if they had always owned it. HOWEVER, the original loans must also be considreed. generally speaking borrowing to payout a exspouse doesnt allow the new borrowing to be considered. Sometimes, all borrowings for the property can be comprmised but commonly half is. If transferred THEN sold the owner must consider the tax liabilities. Genereally property settlements consider NET values eg Value of dwelling less and accrued possible CGT at the transfer date. Otherwise one former spouse may acquire a property witha huge tax issue and another gets an exempt home.
It might be worth considering a normal transfer - not a family law settlement transfer. Or keep as is and sell.
So is a case of doing some numbers or knowing if one would hold or fold after the transfer. Many thanks guys for your input
