Transfer Joint Tenancy to Tenancy in Common

Discussion in 'Accounting & Tax' started by JJRomeo, 3rd Jun, 2020.

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  1. JJRomeo

    JJRomeo New Member

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    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?
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    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.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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  4. JJRomeo

    JJRomeo New Member

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    Thanks for the quick replies. These are great and very helpful!
     
    Terry_w likes this.
  5. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    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.
     
  7. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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.