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Tax Tip 80: Deductibility of Interest for 2 Unequal Owners

Discussion in 'Accounting & Tax' started by Terry_w, 9th Nov, 2015.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Tax Tip 80: Deductibility of Interest for 2 Unequal Owners

    Say A and B own a property as Tenants in Common with 99/1 shares. In this situation they must claim all expenses, including interest, in the same percentages as their ownership.
     
  2. datto

    datto Well-Known Member

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    Now what if A divorces B and moves in with C in a civil union. A pays out B the one percent.

    B's name is scrubbed off the title and A now owns 100%.

    A should be entitled to now claim ALL the interest and other deductions.
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    No, paying someone out is not a deductible expense
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  5. datto

    datto Well-Known Member

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    Ah, just as I thought, there are tax tips covering divorce. No stone has been left unturned.
     
    Perthguy likes this.
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    A family court property order satisfies a CGT rule which effectively treats A as always having owned the portion of title formerly held by B. And exchange of cash etc isnt a deductible etc. Its all a CGT issue without a CGT trigger event. State laws generally also don't impose duty either. Of course any existing loans needs to be refinanced etc. This is all part of the advice given by solicitors in a marital breakdown.

    Important that DIY divorces are correctly completed through the family court to avoid a CGT problem later !!