Spouse asset transfer - Stamp Duty exemption?

Discussion in 'Accounting & Tax' started by Wall Street, 3rd Aug, 2017.

Join Australia's most dynamic and respected property investment community
  1. Wall Street

    Wall Street Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    133
    Location:
    Melbourne
    Hi All

    Following a relationship breakdown, I’m looking to transfer a PPOR from joint names to my sole name (subject to a financial agreement). As a spouse transfer, it will not attract Stamp Duty or trigger a CGT event.

    However nothing in my world is easy… In order to get finance, I need to add my dad’s income into the equation. To do this he needs to be added to the title in order to satisfy lender criteria – CBA indicated that they are happy to do a 1% share to him, 99% to me. Dad is aware of the liability for the whole amount, despite the mere 1% interest in the property.

    Now for my stumbling block –

    1. As I am not the 100% transferee, will this change the nature of the transaction, thus killing the Stamp Duty exemption? Hopefully, I can get away with paying duty only on the 1%.


    2. If full Stamp Duty is to be incurred in the above situation, I am hoping to avoid it by first transferring the property to myself, then having the bank do a back to back transaction into joint names (and paying the duty on 1% from the 2nd trans). My issue here is that it will need approval from the banks (and I don’t know whether they will come to the table on this basis).

    I will be getting tax/legal advice, but I thought that I would run a few scenarios by you guys due to the knowledge contained within the forum.

    Also a side note – are there any lenders who would allow the 3rd party to be on only the mortgage and not the title? Property is at 65% LVR - so no LMI.

    I’d be interested to hear your thoughts :)

    Cheers
     
  2. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,788
    Location:
    Perth, WA
    Are you doing your property division according to legal advice? Bad idea to do anything if you aren't.

    Otherwise how will you know if it will hold up?
     
    Wall Street likes this.
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Wall Street likes this.
  4. Wall Street

    Wall Street Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    133
    Location:
    Melbourne
    Thanks guys. I will definitely be getting legal advice on this. Just thought I would play around with a few scenarios.

    The property is in Vic if it helps.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    One way around it is to transfer to yourself 100% first and then to you and dad 99/1.
    Seek legal advice on whether you can do 2 settlements, to do this if you don't have the ability to fund it on your own. Also get advice on the anti-avoidance provisions.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Another thought, perhaps your dad could act as trustee for you for the 1%
     
  7. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,788
    Location:
    Perth, WA
    Have you spoken to a family lawyer yet?
     
  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    This is always something that a lawyer should advise and assist with as failure to settle the family law issues validly wont meet the CGT and duty concessions and leave a potential liability to the ex spouse too.
     
  9. Wall Street

    Wall Street Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    133
    Location:
    Melbourne
    This is the way that I will likely have to go, so I will have to do more research into it.

    Very good point - this hadn't even crossed my mind!

    This could be a possibility if he were to be shown on title. The only issue would be the bank's requirement for him to have an actual interest in the property,
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Do they need to know?
     
  11. Wall Street

    Wall Street Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    133
    Location:
    Melbourne
    Thanks Paul. Yes I spoke to a family lawyer last night to get advice about validly settling any financial agreement/getting consent orders.

    My main issue remains to be the financing for the PPOR.
     
  12. Wall Street

    Wall Street Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    133
    Location:
    Melbourne
    As far as I'm concerned, my goals are -

    1) Get finance (so, keep the bank happy)
    2) Get the Stamp Duty concession

    In terms of dad holding the share in trust, they would not need to know (if that is what you are referring to).
     
    Terry_w likes this.

We provide our clients with the opportunity to select their own investments from a wide range of ASX listed securities. We provide the research to ensure your selections will achieve the goals. This is the value of advice.