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Transfer between spouse

Discussion in 'Accounting & Tax' started by Bris Jay, 6th May, 2016.

  1. Bris Jay

    Bris Jay Well-Known Member

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    I've read the tax tips on this but I don't know if I've completely understood a few points:

    I've just bought a property with my partner and it would qualify as a spouse but we put the house 100% in her name and the loan in both names.

    We are now in a situation where I am likely going to need to transfer the house 100% into my name. So I know that there is a stamp duty exemption and it is PPOR which we've owned for a whole two weeks so there is no CGT.

    I'm wondering if the loan (which will just remain in both names and be serviced by me) will become a tax deduction for me in the future? I will refinance before I ever move out and turn it into an IP but since I never actually "purchased" the property in my name, am I screwed or can I claim the interest in the future?

    Also, I know that there will be fees from the titles office to change the rates, etc. and the bank will likely need to change their mortgage on the property to my name but are there other hidden fees?

    This is not an ideal situation and not exactly a choice so I'm just trying to minimize future issues.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You shouldn't could you partner 'it'!!

    You need tax advice,

    If the house is in QLD there would be full stamp duty.

    You will need to consider the loan carefully. Any mortgage will need to be discharged which usually means paying out the loan but when staying at the same lender they may keep the loan as is and just change the mortgage. This would mean the interest is not deductible because you haven't borrowed to buy the house.

    I suggest at the very least you change banks and this will make sure a new loan but even then borrowings haven't really changed.

    Better get a private ruling I think.

    But first, why would you need to transfer title in just 2 weeks?
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Yeah...Thats a serious error or misunderstanding. Basically it would duplicate the full duty and legals and likely require a whole new loan to be settled.

    You may just have to accept that the property is a matrimonial asset but is in your wife's name
     
  4. Bris Jay

    Bris Jay Well-Known Member

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    We bought the house in her name for the purpose of both of us owning a house if we break up. She's now decided that she doesn't want the house. Since the loans are in both names and the whole thing is secured against my property, I really don't have a choice.

    She will gladly sign the property over since she hasn't put a cent into it but that means that I need to do the transfer.

    I just re-read the guidelines and now I do see that it's only free if it's to transfer it from 100% to 50/50. Looks like bad news for me...
     
  5. wylie

    wylie Moderator Staff Member

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    If you break up won't this house be in the mix to be worked out anyway, regardless of whose name it is in?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes
     
  7. Tranquilo

    Tranquilo Well-Known Member Premium Member

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    Why would you buy with thoughts of maybe you could break up.
     
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  8. Bris Jay

    Bris Jay Well-Known Member

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    I'm lucky enough to have found a girl that isn't interested in taking more than she contributed. We have always kept money separate and I've always contributed majority. If we do break up then she's happy to leave me what I had before we met. She's out $0 into this property and isn't planning on being bad about it.

    At this stage it's just discussing options (it's the whole "are we certain that this is what we want for life" discussion).

    She was happy to have this house regardless of our relationship and as per above, she's very trustworthy and her servicing the loan was never a concern of mine. I'd simply stay with my name on it until she can refinance with 20% equity (she has no deposit).

    The only difference is that she has now said that if we're not together then she can't deal with owning a house that we bought as a couple.

    If all else fails, we can renovate and flick it. She can keep the profits, I really don't care. Just need to know options.
     
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  9. RPI

    RPI Property Lawyer, Town Planner Business Member

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    The free transfer for a 50:50 split only applies if it is for your PPOR.

    s151 Duties Act

    Transfer duty is not imposed on a dutiable transaction that is the transfer, or agreement for the transfer, by way of gift, from 1 party to a subsisting marriage, de facto relationship or registered relationship, to the other party to the marriage, de facto relationship or registered relationship, of an interest in residential land if— (a) after the transfer, the residential land will be owned by the parties as joint tenants or tenants in common in equal shares; and (b) the residence will be the principal residence of the parties.
     
  10. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    See a solicitor and it may fall under family court orders as a family law property settlement that is mutually agreed. ? May need to live there otherwise.
     
  11. Bris Jay

    Bris Jay Well-Known Member

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    We are moving into that property tomorrow. It will be our PPOR.
    As I mentioned, we're not going through a horrible breakup and there's not some dire need or desire to split assets. We're just looking at options.
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It is a bit drastic to incur full stamp duty twice on the same property with such a short period of time. Is it really worth the expense and the hassle?
     
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  13. Marg4000

    Marg4000 Well-Known Member

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    Move in, relax and enjoy.

    Suggest to your partner that you forget the ownership issue for a couple of months to give her a chance to get used to the idea and to see that owning a property is not scary.
    Marg
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    And don't forget you can transfer at any time. Leaving it for years may even assist you with a debt recycling strategy.
     
  15. Bris Jay

    Bris Jay Well-Known Member

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    Yeah, after the responses on here we will leave it for a while and if we need to make a change then she will sell it to me at a rate that makes it worth paying stamps for the benefit of negative gearing. I really appreciate the responses!
     
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