Lets say you are tenants in common A 50% B 50%. And you want to change this to A- 75% and B- 25%. What do you need to do (free title no finance)? What about CGT?
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Originally posted by Kristine..
G'day Always
Where is it written who owns what share?
Unless there is some sort of written documention, it is decided between the owners.
Therefore, change the balance of ownership as you agree between you.
Cheers
Kristine
Originally posted by Bill.L
Hi Kristine,
I know it's late and maybe I'm not thinking clearly
Yes, it was late, wasn't it? What were we doing up at 3am? I was still buzzing about the Melbourne meeting and GoAnna's amazing project!!
However the thought that I had was along the lines of selling a part of a property, gaining CGT benefits, and helping(not by giving) a young relative(maybe grand children when I'm 64).
For instance assume I have a cap gain of $200,000 in a property and a clear title. If I sell and have structured my income for the year to be near zero, then I pay CGT on 50% or $100,000. This will relate to $40,000 being payed at the top marginal rate of 48.5%(including medicare).
However if I sold 25% of the property(IF POSSIBLE) then CGT would only be 50% of $50,000 or $25,000 and at much lower marginal rate.
Don't forget that capital gains is reduced by half if you have the asset more than twelve months.
Also, the highest tax bracket doesn't apply until you exceed $60,001 in assessable income in any given tax year. So yes, if you already earn a taxable income of $60,000 then anything extra in that year would be taxed eg capital gain of $100,000 reduced by 50% to $50,000 would mean CGT of $24,250 approx.
But if you have no other taxable income for that year, then tax on $50,000 would be as per this table (ATO website):
Tax rates 2001-02 and 2002-03
Taxable income Tax on this income
$0 - $6000 Nil
$6001 - $20 000 17c for each $1 over $6000
$20 001 - $50 000 $2380 plus 30c for each $1 over $20 000
$50 001 - $60 000 $11 380 plus 42c for each $1 over $50 000
Over $60 000 $15 580 plus 47c for each $1 over $60 000
The questions raised are about how much stamp duty is payable and therefore if it is worthwhile. Maybe by having some type of formalised partnership agreement, lodged with the tax office, and changed each year would be possible.
Any transfer of property attracts stamp duty at valuation. Once upon a time people could 'sell' property for $1.00, but nowadays I believe it has to be 'fair market value' for the purposes of tax and stamp duties even if the property changed hands for no actual money.
Even 'gifts' of property are levied stamp duties.
I am doing a bit of thinking aloud here.
Always good to do that. Hope I didn't sound crabby - must be lack of sleep!
good night.
Lets say you are tenants in common A 50% B 50%. And you want to change this to A- 75% and B- 25%. What do you need to do (free title no finance)? What about CGT?