Strategy to split JV assets without stamp duty and CGT

Hi,

I read this somewhere here- maybe one of Terry's tax tips but can't find it after many hours of searching.

A and B buy a property together (50% each tenants in common) with the intention of building 2 Units, both of equal value.

A will solely own unit 1 and B will solely own Unit 2. Unsure if the properties will be PPOR or Investment at this stage.

What is the strategy initially so they don't have to pay stamp duty and CGT when splitting the title?

And can it be done retrospectively (before subdivision)?

 

Partitioning it is known as.

 

Partition of a title has a range of issues incl GST, tax (income tax / CGT) and also stamp duty. Its essential to obtain personal legal advice. Partitioning dissolves the legal joint ownership through a mutual disposal and acquisition to each other into separate titles and is one of the oldest common law issues with land. Each state has rules to be followed.

The GST issue is specifically important and assumptions that GST wont apply need to be given legal advice based on whether the land is held on capital or revenue account AND the timing.

 

Thank you Terry and Paul.

Will do research and speak to my accountant.

 

Lawyer should be the one as legal issue.

It can be done down the track without duty or CGT potentially but need to convince the commissioners that there is no change in beneficial ownership of either end block.

 

btw I recall reading 2 recent private ruling decisions on this, from the CGT perspective, involving siblings who jointly owned. Commissioner rejected their argument.

 

The Commissioner takes a tough stance on this one. Mostly from the nexus to the tax ruling on GST and Partitions. Its hard to argue a supply isnt a supply