which structure for PPOR with uneven split

Discussion in 'Legal Issues' started by Arthur Dent, 5th Dec, 2017.

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  1. Arthur Dent

    Arthur Dent New Member

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    My partner and I have bought a house which will be our PPOR. We're not married yet although it's inevitable. I am contributing about 80% of the cost and her the remaining 20% (although this will get blurred over time as we contribute evenly to any improvements, maintenance, rates etc).

    What is the benefit to choosing to own as tenants in common with the split reflected on the title, versus just owning we joint tenants? We have absolutely no interest in moving on and keeping this as an IP later.
     
  2. Trainee

    Trainee Well-Known Member

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    Thats what you think...now. Why dismiss the possibility when planning for it costs you nothing?
     
  3. Poppy

    Poppy Well-Known Member

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    We’re in identical situation. We understand under NSW law we can settle our new PPR (in March) as tenants in common say 99/1 in wife (my) favour.

    The reason would be our large new house on beach in Syd has several multiple rental options now and in future. (I’ll instantly rent out the granny studio for up to 1-2k per week)
    — I’m in a lower tax bracket than hubs.

    Then in future (fast forward ten years and hub in low tax bracket and we’ve added a second storey to rent out) we can *change title* to 50/50 spouse — For Free?

    We assume we will be permitted one change only (prob from 99/1 to 50/50?) for free and except from stamp duty....
     
  4. Arthur Dent

    Arthur Dent New Member

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    Sure, but as we have similar incomes (and no plans for this to change eg maternity leave), we would probably want a 50-50 split anyway - which would be effectively the same as joint tenancy, other than estate issues, wouldn't it?
     
  5. Terry_w

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

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    This is extremely important to consider so seek specific legal advice.

    Consider single names.
    Strategy: Buying Investment Properties in 1 name only Strategy: Buying Investment Properties in 1 name only


    If you want joint then TIC generally better I think as you can leave you share to anyone. With JT the survivor takes automatically bypassing the will. However if you expect the will to be challenged then JT may be better.
     
  6. Terry_w

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

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    Not quiet. A main residence in NSW can be transferred to 50/50 without stamp duty, but by both being owners any interest on the loan won't be deductible other than a small part of the original loan - generally.

    owning 1% of something is not much better than owning nothing of it, but there are many disadvantages.

    Legal Tip 68: Avoid 99%/1% ownership of property Legal Tip 68: Avoid 99%/1% ownership of property
     
  7. Arthur Dent

    Arthur Dent New Member

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  8. Terry_w

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

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    Most of the same principles apply.
     
  9. thatbum

    thatbum Well-Known Member

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    Did you read the post? Nearly all of the things covered apply for PPORs as well as IPs.

    Personally I can't think of many advantages to owning 1% of a property - and lots of disadvantages. Why would you want to do that?
     
  10. Terry_w

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

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    no
     
  11. Arthur Dent

    Arthur Dent New Member

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    I don't (another poster asked about that). My partner and I are going in 80/20 and so I'm asking what value there is in reflecting this in the title.

    I think I am understanding that there's not much value in that. Instead the ownership could be structured so as to have future benefits.

    I will study Terry's article further. Thanks.
     
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  12. thatbum

    thatbum Well-Known Member

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    Yep I pretty much agree with that 2 sentence summary - well put.
     
  13. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I would go with Terry suggestion of one name. Marital property doesnt have to be on title to be a family asset subject to split later. 80/20 would have no meaning for any purpose if its your own home. The issue only becomes evident if its an IP. And then the 80/20 may be contrary to what youw ant at that time.

    One of the benefits of one name is if you ever want to make it an IP in NSW you can transfer 50% of title to partner for consideration and refinance this at that time - No duty. Can enliven deductions without a CGT issue. If at that time its no a viable idea then dont. No extra cost.

    Speak to a solicitor about options as its all legal issues.
     
  14. Orion

    Orion Well-Known Member

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    I'm finding this thread interesting.

    @Arthur Dent , what did you end up doing?

    I'm in a similar situation, we are contributing 50/50 to a deposit, I'm the high income earner, she is the lower income earner (and will earn zero while we start a family) - pretty standard scenario.

    I imagine this (Victorian) property would suit us for at least 5-6 years, after which we may upgrade or move out and either sell / convert to IP.

    I think in terms of loan we'd get an offset and make extra repayments into the offset, so if we do convert to IP we can move out and it becomes an 80% loan again (minus whatever we've paid down via P&I payments).

    A mortgage broker suggested 1% my name / 99% her name, so the positive cash flow will be in her name (assuming it's positive!), although this seems to be against what others are saying here - 100% my or her name??
     
    Last edited: 21st Dec, 2017
  15. Terry_w

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

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    Ownership structuring is legal advice - best not to ask a broker for advice like this.
     
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