Change of Title upon Divorce/Seperation

[rastus2]

Thanks for responsors so far,

Just to give some financial backround,

We have 1 IP and 1 PPOR.
She has moved out and moved into IP which is being rented by a friend of hers.

Problem with that is i guess the IP is not really an IP anymore with her living in it?
She wants me to have the IP and keep the PPOR for herself and three of the kids. I have one child still with me. I am concerned about the fact I would be up for Capital Gains if I sell the IP and she would not as the house has always been a PPOR.

The PPOR is worth more but I am not concerned with that as she has aggreed to leave my superanuation alone.
At the moment I am paying for everything which is fine but I don't believe I can do that for long as she is now receiving most of the Familly Assistance which amounts to $700 a fortnight.

I guess I am blathering a bit because there is no one else to tell. Sorry about that.

I guess I am mostly concerned with providing for the kids without being used by my ex. I don't want to go to court and hope we can work things out equitably. Because the market is slowing down at the moment neither one of us wants to sell but I don't think my ex will be able to afford the payments on either of the houses.

Hi Ronulas5,

sorry to hear of your situation. Don't feel bad about posting your heart out... some good souls on this forum who are not judgmental. Even us D&G's.

I did consider what I'd to in the same situation (we all fight with our partners and I guess we all sometimes wonder 'what if')....I kind of decided if it ever happened I'd ask her if we could use the family trust to ensure that the kids are looked after without either of us being seen to take advantage of any money put towards their future... both of us have equal say in it's distribution and that way we could both be happy with any important purchases. A simple joint bank account in trust for the children.

As for the house... don't know.. your right.. IP sale will cost you in CGT... perhaps look at getting that checked to see if it's easy to quantify the amount you lose by taking it on board... you *might* be able to convince your spouse that once she has put $X into the family trust (or a joint banking account for the kids), her share of the IP cost to you is deemed dealt with... that way there is no time requirements... and you both know where you stand.

Just thinking outside the box.

Best of luck.

 

[rastus2]

1. Give everything to the wife. Keep nothing.
2. Go rent a caravan.
3. Start again.

I haven't been there and I haven't done that - but that's what I'd do.

That way, the wife and kids get absolutely everything - and the nice friendly lawyers don't get a cracker.

geez... there is fair, there is more than fair, there is silly, but this is more than silly.

I'd kind of agree with the last comment... don't get the lawyers anything they don't need to have both of you walk away without a major fight. They can be the big winners in this.

However if your wife is reasonable and the divorce is not 'messy' then ask her what she thinks is reasonable in writing (give her pleanty of time to decide it).. and work from there... something close to her idea of reasonable is probably going to cost you less in the long run than fighting in the courts for what you think is fair.

My sister left her husband. A good man whom she was no longer in love with at all although 2 children were part of the family also. Her lawyer openly stated she could take most of his money (Super, bank accounts, house etc) since she started the relationship with a fair amount of money and he just had a good job... basically she could screw this decent man for most of the family wealth despite him doing nothing wrong... she told the lawyer to pull her head in and they both settled for a fair result... not all ladies are so reasonable.
Find her idea of reasonable and try to work with it rather than against it.

 

[Steve Cockrane]

Hi Ronulas5,

Firstly sorry to hear about your situation, but it does happen and having been there I can well understand what you're going through.

To quote that great Australian philosopher "KENNY" - "Cut out the middleman find someone you hate and give them a house." Sorry to make light of your situation no malice is intended, after all laughter is the best medicine.

Having gone through it myself and witnessed a number of friends and clients go through the same thing a marriage breakdown usually follows a fairly set pattern.

• 
  Initial recrimination/hostility, usually caused by the hurt and guilt associated with the break up. When this settles down it leads to..

• We can do this and be adult. Like the eye of the storm this is a deceptively peaceful place. Then comes ...

• Division of the camps - usually friends or family will get into either parties ear and say things like "You can't let him get away with that" or "She doesn't deserve to get that."

• This leads to a breakdown in communication, a drawing of battle lines and a general commencement of hostilities. This is when the worst fights over division of property and child access occur.

• Then we get to a kind of détente, where life can go on and all parties get along reasonably well.

The time between each stage varies from a few days to months and even years, but most (not all) divorces I've seen go through a similar kind of pattern. Just wanted you to be prepared.

As most posters have said S/D shouldn't be a factor but you're right to be concerned about Capital Gains Tax on the IP. I found this article here about the issue (it's 17 pages and I haven't read it all) so it may be a good resource for you http://www.austlii.edu.au/au/journals/RevenueLJ/1990/12.pdf

Your wife will need to be able to service a loan on the PPOR if you go down that path. Also take in to account she'll need to complete any probationary period her employer may require before qualifying once she gets a job before most lenders will consider her for a loan. Also the fact that she's on a single income with dependent kids will severely impact on her ability to service a loan in the eyes of the lenders.

There are a few possible solutions:

• The Simplest: Sell everything, pay the CGT and then split the proceeds and both start over. I note this is not your preferred choice but it is by far the easiest to implement.

• More Complex: Transfer the PPOR to your wife, she qualifies for a loan and you gift her your part of the equity. You take over the loan on the IP and she gifts you the equity in it (if any).

• Even more complex: To qualify for a loan your wife joins with a third party - the tenant who is a family friend say. And they buy the PPOR together.

I'm just throwing up ideas here, but often when the smoke clears the simplest solutions are often the best.

Ronulas5 I wish you all the best and hope everything turns out okay in the end, I wouldn't wish what you're going through right now on anyone.

Cheers

Steve

 

[granev]

Think you have pretty much summed it up Steve , except you missed a point about when one of the parties moves into another relationship - try to have all of this sorted before that happens