Benefit of 99/1 ratio for tenants-in-common ?

[Futurefund]

Hi All,
I'm getting ready for our 2nd IP purchase and will be seeing a (new) accountant beforehand but would just like to get a handle on this question:

What would be the benefit of a 99/1 ratio for myself and my wife as tenants-in-common on this 2nd IP (the first is in my name only) ?

I am the sole income earner now and I can see that in the future (with my wife working again) she would be able to claim deductions, but only of 1%.

Or is the idea to set it up like this now - because the ratio can be changed easily later (rather than having myself as sole owner and thus much more difficult to add my wife as a tenant-in-common later) ?

Thanks for your advice !

 

[Rob G.]

Changing the ratio of ownership would normally be a CGT event.

Tenants in common was a popular of way of income income splitting between related parties using fringe benefits tax until that was stopped. Beware of old postings.

Now it is mainly used for joint ownership by unrelated parties, or for asset protection or estate planning amongst other things.

Cheers,

Rob

 

[marg4000]

The only advantage of a 99/1 split is that both signatures are needed to sell. This gives security to both parties if that is what is wanted.

Can't see much point in claiming 1% of expenses.

As Rob said, to change the split lates is a CGT event.
Marg

 

[Jonathon]

Tenants in common was a popular of way of income income splitting between related parties using fringe benefits tax until that was stopped. Beware of old postings.

Have they stopped the trick of having the 1% owner's employer paying all the interest, free of FBT? It was ok a year or two ago, but not sure if that's changed recently?

 

[PrimeCommercial]

Have they stopped the trick of having the 1% owner's employer paying all the interest, free of FBT? It was ok a year or two ago, but not sure if that's changed recently?

I was told that it was canned mid last year but I still keep reading articles about it.

 

[Rolf Latham]

Hiya FF

I try to discourage that in recent times. used to think it was a good idea to give the spouse a better emotional base.

1. Family law will split assets regardless of the actual split as it sees fit

2. if you have a working spouse, then the borrow exposure of 100 % loan for 1 % exposure and 1 % rental income makes for poor sole serviceability later on.

ta
rolf

 

[Futurefund]

Thanks all for your answers; I don't think I'll be going down that path. Interesting though because I read a post just last week (can't remember the topic) where a couple in similar circumstances had bought their 2nd IP with that 99/1 ownership split.
Anyway I will ask my accountant as well before I do anything.
Cheers,
Greg