Transfer Joint Tenancy to Tenancy in Common

Hi everyone,

My brother and I own 2 properties together. We currently have them set up as Joint Tenancy.

My brother is about to move overseas (UK).

He is not looking to move back to AUS anytime soon.

Noting that his UK employment will not allow him to claim the investment property deductions, I would like to know a few things:

1. How do I go about changing the Joint Tenancy to Tenancy in Common
2. I would like to change it from 50/50 to 90/10 (since my brother will still put in some $ into the investment)
3. What are the tax implications of doing this (stamp duty? CGT?)
4. What paper work do we need to have and keep for record keeping purposes?

 

You are buying another 40% of the property. You pay stamp duty at the market rate (agent appraisal or valuation as evidence of the value of the property and your individual interests).

Your brother will be assessed for a capital gain at market value.

A solicitor or conveyancer can prepare the transfer documents and changes to the individual ownership.

 

1. if NSW land see Transfer severing a joint tenancy - Registrar General's Guidelines
you will need the mortgagee's permission

2, 3, 4. This will trigger duty and CGT and new loan application needed.keep all transfer docs and loan docs as per normal

 

Thanks for the quick replies. These are great and very helpful!

 

And foreign purchaser surcharge duty possibly (depends on his citizenship etc).

The costs to change this need to be weighed up with the new non-resident CGT changes which become effective on 01 July 2020. It would be wise to consider the broad tax implications as well as the legal and loan issues. To effect a change of owner a solicitor / conveyancer is often a start point as a contract is still needed.

 

Yes good point Paul. I don't think this would attract a foreign person surcharge even if one party is a foreigner, but some legal advice is needed.
Also no contract needed for going 50/50 TIC but if unequal a transfer is being made and you would have to consider how this will be funded and paid for - will it be a gift or a market value transfer.
If you want to deduct the interest on the loan further advice is needed as changing %s can result in less interest being deductible.

 

I saw one instance which potentially breached FIRB rules for the person acquiring the increased interest. Legal advice is recommended as there can be so many complicating factors to property ownership changes.