Changing a deed...Cost??

[bradje]

Hi,
A business partner and myself have both our names on a deed that the bank holds for a residential IP. The Loan is $650K.

Unfortunate circumstances (health) mean that my partner wishes to get off the deed so as to minimise debt exposure.
I have no problems with that as I think the IP is quite good.

But.....Can anyone pls tell me how much the bank/gov't will charge, to have him taken off the deeds?

ta,
JB

 

[pinkboy]

Hi,
A business partner and myself have both our names on a deed that the bank holds for a residential IP. The Loan is $650K.

Unfortunate circumstances (health) mean that my partner wishes to get off the deed so as to minimise debt exposure.
I have no problems with that as I think the IP is quite good.

But.....Can anyone pls tell me how much the bank/gov't will charge, to have him taken off the deeds?

ta,
JB

You will trigger a 'sale', that is, for your partner to get out, you will have to take on the debt. This will be subject to your lender happy with your servicibility/valuation/LVR/Credit file etc and dependant on how long you have held the IP, most likely have to submit full application. You will probably be up for Stamp Duty and CGT as well.

Did you and your partner have an exit strategy?

Terry_w, did I miss anything?

pinkboy

 

[Terry_w]

Hi JB and PB

PB has covered it mostly.

But some other things to consider, possibly:

Divorce - is the person trying to hide assets from a spouse or avoid a property settlement? DOn't want you to get caught up in this.

Bankruptcy - shifting assets to avoid them falling into the hands of creditors can be risky for you and him. Will you be paying full market value for the purchase

Death - if the partner dies unexpectedly could a claim be made against the property transferred.

Stamp duty will be charged on the value of the property transferred. ie on the value you pay him/her/it (or market value if more).

Loans will need to be reapplied for because ownership is changing. Exit fees and entry fees maybe. Watch out if loan fixed.

Probably need a conveyancer to assist too in the transfer too.

 

[bradje]

Thx very much guys.

Would you have any idea how much the ballpark cost will be for the property given that the loan is $650K? The loan is not fixed.
Cheers,
JB

 

[Terry_w]

loan is irrelevant.

to work out stamp duty go to the OSR site in the state the property is in and use the stamp duty calculator. This will be based on the value of the part you are transferring.

So if it is a $800,000 property and he owns half you would be transferring $400,000 worth.

ps it is not going to be cheap!

 

[Jtkumnick]

a side question on this transaction- if the IP was held in by a company with the shares owned by the two ppl, would the selling of the shares to the buying partner trigger the same level of CGT/Stamp Duty as what would be due here?

What about units in a unit trust?

 

[Terry_w]

a side question on this transaction- if the IP was held in by a company with the shares owned by the two ppl, would the selling of the shares to the buying partner trigger the same level of CGT/Stamp Duty as what would be due here?

What about units in a unit trust?

It would depend where the company or trust is 'located'.

In NSW the transfer of shares of a private company or units in a private trust would be dutiable property. I think the rate is 0.60%. This was supposed to be abolished on July 1 this year, but it has been pushed back to 1 July 2013. (This only applies to non land rich companies/trusts).

CGT would still apply.

If the company or trustee has given a mortgage then the lender may need to be involved too.

 

[bradje]

Thx Terry.
Very helpful.
JB