50% transfer duties? (qld)

Discussion in 'Accounting and Tax' started by ruroshin, 12th Jun, 2015.

  1. ruroshin

    ruroshin Member

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    Hi,

    I've read some post on here about transfering duties between spouse but still not 100% sure.

    So my situation is this, my spouse and I have lived in our current home for the past 7 years, we are planning in the future to move to another house and rent out the current one.

    The current home is under my spouse name but we want it to be under my name only, I know in QLD you can transfer 50% of your home to your spouse duties free so my questions:

    1. My wife transfer 50% of the home to me, no duties paid. Then perhaps later on she transfer the rest of the 50% to me, do we then pay only 50% of the market value for Transfer Duty?

    2. After a year we move out and its rented under my name. Any legal problems with this?
     
  2. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    I wont address the legal issues and Duties Act issues. I will mention the tax issue. In most states the spouse transfer allows only a change from one spouse to a 50/50 interest. Thereafter its dutiable - Especially in QLD. The duty is proportionate to the % being acquired.

    If you have a present loan then doing this could mean that the future changed ownership would result in loss of interest deductions unless the changes of ownership is actually financed and paid to resettle the loan and title. 100% loss of tax deductions would occur otherwise. And you would need the bank authority in any case.

    This also is a CGT event and may either trigger CGT or if its exempt the cost base may be reset at a higher level.

    I would seek specific legal and tax advice to avoid making a mess of things.
     
  3. Terry_w

    Terry_w Member

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    I think you will find that a transfer in QLD is only exempt if it is a gift (and is the main residence and will end up in equal shares).

    You cannot borrow to make a gift and deduct the interest.
     
  4. ruroshin

    ruroshin Member

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    No that's not that what I to do.

    First, do 50% transfer as a gift (it is our main residence) and we both end up in eqaul shares. No Duties payable.

    Second, sometime AFTER the above has happen, my wife transfer her 50% to me as a normal transaction. I pay duties on 50% market rate (this is what I wanted to know and I think Paul answered it). I now own 100%

    Third, when we eventually move out I will rent it out under my name as I now own 100%.
     
  5. Terry_w

    Terry_w Member

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    Yep, I don't see a problem - other than you not be able to claim 100% of the interest.
     
  6. ruroshin

    ruroshin Member

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    One thing I forgot to mention was both my wife and my name is currently on the mortgage loan. Does that make a difference? A refinance?
     
  7. Terry_w

    Terry_w Member

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    It could. But your interest won't be deductible anyway as one of you will be borrowing to gift.