Maximising deductibility on ex PPOR

[Luke]

Greetings Dale and others,
The old forum had some discussions on transferring ppty between spouses, and particularly about the stamp duty concessions for such an event. However I've been pondering if such an arrangement could help maximise tax deductions... Hmm. Here's the situation.
Old PPOR, valued around $180k, tax-deductable loan of say $56k, non-deductible extra 50k. I think the ppty title is under tenants in common. (I'm sure this is important, but unclear of implications.) Currently leased at 200/wk.
Therefore: currently

My Share Wife's Total
Value 90 90 180
Deductable 28 28 56
Non-deduct 25 25 50

If she could 'sell' her half to me at that price, and I could refinance with the bank then would we be in the following situation: I would have to retire the debt on her half -yes? So then we might be at this situation.

My Share Wife's Total
Value 180 0 180
Deductable 28+90=118 0 118
Non-deduct 0 0 0

The left over 10k goes against new PPOR (again non-deduct) so that even after mortgage costs, taxes etc (presumably deductable anyway) I would have eliminated about $60k of non-deductable debt, and fixed the loan structure to boot. At that debt the ppty would be marginally -ve geared, but new house is much more affordable.
So... Am I dreaming? ;)

Many thanks
Luke

[DaleGG]

Hi Luke

This get's a little complicated so please bear with me . . .

You will have two halves, which will be treated separately for tax reasons. So, you will achieve a slightly better result in that your existing non deductible debt will remain non deductiible. However, the debt that your spouse had is possibly now deductible because of the "sale" of her half to you.

She will not pay CGT because of the property being a PPOR. You will have 1/2 PPOR exemption and another half subject to CGT.

Good luck

Dale

[Luke]

Thanks Dale.


Is there any difference in the advice you would give if the ownership was actually a Joint tenancy, not tennants in common?

Regards,
Luke