Tax Tip 21: Tax Advantages of Buying property in 1 name only

Discussion in 'Accounting & Tax' started by Terry_w, 18th Aug, 2015.

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  1. Terry_w

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

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    Yes many legal implications. Speak to your lawyer about the asset protection and estate planning aspects as you will have an equitable interest in the property.

    For tax not so much of an issue, you are just paying down her loan.
     
  2. Terry_w

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

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    CGT can also be avoided if one spouse is running a business from home, and that spouse is not the owner of the homer

    See
    Example

    From TD 1999/71
    7. David owns a 6 bedroom home which he and his wife Sophie have used as their main residence since it was purchased in 1995. Sophie has a physiotherapy practice and the two front rooms of the home are used exclusively by Sophie for her practice. Sophie and David live in the remainder of the home. If David had incurred interest on money borrowed to acquire the home, he could not deduct any of that interest under section 8-1 because it would not be incurred in gaining or producing his assessable income. Because David would not be entitled to any interest deduction, section 118-190 does not apply to reduce David's entitlement to a main residence exemption when a CGT event happens in relation to the dwelling.


    Tax Tip 91: A Non-owner running a business at home
     
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  3. L_auren

    L_auren Well-Known Member

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    Hello Terry @Terry_w , thank you so much for all of your tips. If the IP title is in one name but the loan is in two names does the one with the title claim 100% or 50% of the income and deductions?
     
  4. Terry_w

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

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  5. Paul@PAS

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

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    CGT can also be averted if one of the business owners and operators conducts a business using a company or trust. A common misunderstanding is that a working Director working from home will trigger a CGT issue. Note also that the company / trustee cannot claim any occupancy costs as it doesnt own the property !! Nor can the company or trust claim a % of rent unless it is also party to the lease.
     
  6. L_auren

    L_auren Well-Known Member

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  7. Terry_w

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

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    Keep in mind there have been a few changes in the Code of Banking Practice since this thread was started and it is generally much harder to have both spouses on the loan where one will be the owner - harder to find a willing lender.

    Loan Tip: Co-Borrowers, new requirements Loan Tip: Co-Borrowers, new requirements
     
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  8. L_auren

    L_auren Well-Known Member

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    Thanks again!
     
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  9. jaybean

    jaybean Well-Known Member

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    Is all this advice also relevant to defacto relationships or just marriage?
     
  10. Terry_w

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

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    what advice?
     
  11. jaybean

    jaybean Well-Known Member

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    I guess I'm referring to the original post.
     
  12. Terry_w

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

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    which part in particular?
    All the points listed can apply equally to marriage or defacto and many could even apply for friends or siblings contemplating joint purchases.
     
  13. Raja11

    Raja11 New Member

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  14. Raja11

    Raja11 New Member

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    Hi Terry,Thanks for sharing Info.Does above tax benefits applies to customer which got property land title and loan on one name or does above tax benefits also applies to someone which got property land title on one name but property loan is under joint names with 50 -50 property split.Thanks a lot !
     
  15. Beelzebub

    Beelzebub Well-Known Member

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    With the two on mortgage one on title structure - are their limitations regarding max LVR with this structure for a PPOR?

    Thanks
     
  16. Terry_w

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

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    Not sure if any recent restrictions above 80%, but under no lvr restrictions
     
  17. Terry_w

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

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    Another advantage that I thought of recently is at death. It can be possible to squeeze out extra CGT savings by having separately owned main residences.

    I might write another post on this.
     
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  18. Stockastics

    Stockastics Well-Known Member

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    Hi @Terry_w .. I have been advised by mortgage broker to go with 95% and 5% ownership structure on the title for investment property. My partner's serviceability is significantly less than mine and his logic was in case of my early death (hope not), the IP will be easily transferred to my partner (no stamp duty) and no estate will be involved. Partner will be able to decide what to do with IP rather than banks (serviceability). We have money in our other offset accounts so repayment wont be an issue but borrowing capacity would be. Just wondering if this makes sense or is just bonkers. Thanks
     
  19. Terry_w

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

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    Why take legal advice from a broker?
     
  20. gwaipor

    gwaipor Member

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    Two spouse questions please. Property under my name only. Loan is under both of us.

    1. IP is approaching 6 years for CGT. If I sell to spouse, does the CGT roll over?

    2. IP is positive geared and I don't want to pay more tax. How do I transfer the rental income to spouse who is on a lower tax bracket?