[VIC] Joint purchase, deed of partition & FHB incentives

Discussion in 'Legal Issues' started by wentworthmeister, 19th Feb, 2020.

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  1. wentworthmeister

    wentworthmeister Member

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    My wife and I are FHBs in the early stages of looking for a PPOR in Melbourne. Close friends of ours (also a married FHB couple looking for a PPOR) made an off-the-cuff suggestion the other day: "want to buy a block together and subdivide it?" I laughed it off at the time but have since been giving it some more thought.

    It's obviously a complex scenario that would require formal legal, tax and potentially town planning advice, but I've done some initial searching on the forum and found the following threads which suggest it might be possible:
    From what I gather, to avoid or minimise stamp duty, CGT & GST when separating the titles we would want to set up a deed of partition prior/at settlement which would involve a bare trust(?). The objective would be for each couple to end up with their own separate titles on the block as PPORs - in my mind this would ideally happen as early as possible in the scheme of things (so we can be paying off our own separate loans).

    My main questions at this stage are:
    1. How would the initial loan application work? E.g. would the two couples take out a joint loan with separate offset accounts, and then split it at some point? Would we each have to refinance once the partition / title separation has been completed?
    2. Could we do this to a block with an existing dwelling (e.g. demolish, partition and then construct), or should it be an empty lot?
    3. What would the rough time frames involved be (assuming we'd need planning and building permits, then the actual time to construct)?
    4. Would doing this affect our ability to qualify for the various FHB incentives (stamp duty exemption/concession, FHOG)? E.g. would the initial purchase have to be within the normal price thresholds to qualify, or are those thresholds doubled because we're 2 separate couples?
    5. Can you recommend any property lawyers in Melbourne who are also qualified tax accountants?
     
  2. Terry_w

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

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    1. All owners would need to apply
    2. Either is possible but various consequences
    3.
    4.yes it would affect it
    5. See a lawyer that can advise on tax
     
  3. wentworthmeister

    wentworthmeister Member

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    1. One home loan with four applicants, or separate loans? If one to begin with, when and how does that get separated?
    4. Any thoughts on how exactly?
    5. Do you know of any good ones in Melbourne? And what might this advice cost me (ballpark figure)?
     
  4. Terry_w

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

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    You can work out the loan portions and possibly split up front, but 4 names would be on each loan or guarantors). When titles issued you can

    If all 4 owners had never owned before the concessions could be available - but confirm with your conveyancing lawyer.

    Yes I know some good tax lawyers, but would be expensive, prob $500+ per hour. THere are many down that way.
     
  5. Marshmallow

    Marshmallow New Member

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    Being in a similar situation as OP, I'm just wondering if the DOP would need to be signed by the purchase date, or can it be done after the contract of sale has been signed as long as it is before the settlement date (which could be weeks after the contract of sale has been signed) ?
     
  6. Terry_w

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

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    Paritioning after will create a CGT event but unlikely to be any gain. It could be a dutiable event too, but it might be safe for duty in VIC. I have a tip on this.

    Seek legal advice
     
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