Transfer half of property to spouse cgt?

Hi all,

This forum is great. Ive done a fair bit of research, but cannot find an answer.

Principal place of residence, 3.5 hectares, is owned by wife. Would like title to be in wife and husbands name, as joint tenants.

Property bought 20 yrs ago. Not used to produce income.

I understand no stamp duty.

Will cgt apply?

50% of the property is less than the 2 hectare adjacent land exemption.

Or will it be treated as a sale of the entire property, and it being bought back by husband/wife.

 

Yes cgt triggered as over 2 hectares

 

Thanks terry, so in calculating the cap gain would it be treated as a full sale by wife and then purchased back by husband/wife as joint tenants?

Do you have any references for that?

 

No only the share transferred

 

CGT and duty of course unless there is a exemption for that land in SA. Many states have tightened laws concerning duty exemptions on land transfers and care needs to be taken. I would be seeking basic legal advice (it would likely also incorporate and consider CGT and estate planning) on the consequences and merits for this change. The choice of joint v's tenants in common also. In any event a land transfer typically will need a contract as well and a solicitor could support the end to end transfer.

Other factors include refinance if any loan exists and the spouse CGT rule for the main residence exemption where they dont hold a interest.

 

Section 118-120 ITAA 1997 mentions the maximum area of adjacent land covered by the exemption for the CGT event is 2 hectares, less the area of the land immediately under the dwelling. The legislation doesn't mention that your interest in the land needs to be up to hectares, it looks at the land area as a whole.

 

Some strategic land valuation can sometimes help. eg If the area being transferred is a non arable v's the portion under the dwelling and up to 2Ha that are well valued. Creeks, rocky and wooded areas may value down. TD 1999/67

So you can get a land valuer to value the 50% woody messy portion with the swampy creek and attribute the portion of the cost and the value of that portion to the sale rather than as 50% of the total; property value. The example in the ATO ruling allows selective "spots" to each be valued. There could even be a portion with improvements on the land.