Hi All, Love reading from the experts and views from other forum members. I was asked this question by one of my mates and it got me confused. Basically him and his parents jointly own 2 properties of which for one of them he lives in with his wife. He is the only son of his parents. For both of them his share is 10% while his parents is 90%. He now wants to improve his serviceability and so wants: 1) His name to removed from the one of the loans(for the ppty he does not live in) He does not want the liability against his name. 2) For the ppty he lives with his wife he wants to transfer it into his and his wife’s name. (Note that they don’t claim this as an IPin their tax) Can this be done? I believe he will be up for stamp duty(I think for the full value of the ppty) for 2nd dot point. What will he need todo for the first dot point to happen. Will he need to pay stamp duty? He wants 50/50 with his wife Is there a way he can get out from or reduce his stamp duty liability? Thanks in advance.
He's currently liable for 100% of each loan, he would need to confirm that he can remain a 10% owner even if he's taken off the loans for serviceability provided his parents meet the loan eligibility conditions. Some states allow transfer between spouses without attracting stamp duty but he only owns 10%.
Some lenders will only take 10% of the the debt, they may or may not want evidence his parents can cover the repayments. The loan will need to be re-written and I'm willing to guess he's on the he tile as his parents could not afford the loan, if that's still the case he will likely be stuck. Depending on the state he may be able to transfer the title without stamp duty. But again can his wife demonstrate she can afford the property in her own right? When the title is transfered the loan will need to be re-written and put in her name. If she can afford the loan then they may better of just borrowing together for the next purchase. On face value the main benefit will be getting off the title with his parents as this will open up additional lenders to increase overall borrowing power. Before he goes too far down that rabbit hole have him site down with a broker to understand the actual impacts on his borrowing power.
If he is on the title then he must be on the loan - the only exception is a unit trust arrangement where a unit holder may be exempt from going on the loan if he/she has provided cash for their portion of the contribution. If the property is in NSW then proportionate stamp duty should be payable - you will need to check this out with the OSR. Secondly, this will require a new full application so you need to check you can actually get the loan.
Yes 1. Refinance and have him as a guarantor. Will be very difficult to do perhaps if he owns 90% Or transfer title, and have the legal owner be the one on the loan. 2. Simply transfer title from him to the parents. duty will apply. new loans need to be qualified for. CGT event too but you will be the transferee so no CGT triggered for you, but will be for the parents. Seek legal advice
Thanks Yes he is in NSW. Re-2) he wants the title to be transferred in his name and his wife added to it. Will it be better for him to do in stages First remove his parents and become 100% Second add his wife
Thank you all for your reply and help on this. If he is in NSW which of the two(if any) will trigger Stamp duty payment?
transfer of title is a dutiable transaction so if he becomes 100% owner and then adds the wife this would result in 2 lots of duty - however if this is the main residence there is a limited exemption for transfers between spouses. legal advice should be sough about this and about some strategies to maximise future benefits. It might be better for you to add the wife say 10 years down the track before you move out and rent the property
adding the wife later can result in more deductible interest: Strategy: 50% Spousal Transfer Strategy to Increase Deductions Strategy: 50% Spousal Transfer Strategy to Increase Deductions
