converting PPOR to IP Structure

[chris1000]

Im looking to convert my ppor to an IP and trying to establish the best ownership structure. I currently am the only name on the title of the property and its worth $800k with a $400k P&I loan outstanding. I understand that if I refinanance to $800k I/O loan then I can only claim tax back on $400k as the remainder will be used to fund my new ppor.

Would I be able to transfer 50% of the house ownership to my wife (i realise id have to pay stamp duty on this) which would mean that she could claim 50% tax back on the loan and I could do the same?

Thanks in advance for any responses

 

[Terryw]

Each state has different rules on stamp duty. I know that in Vic there may not be stamp duty between transfers between spouses. I think in other states it may only be exempt for transfers from one spouse to both where it is going to be the main residence. But it is worth doing some research as there may be a way around it.

As for the structuring side of things, there is a few things you can do such as:
1. sell to a trust
2. sell half to a spouse
3. start capitalising interest.

For starters I would make the loan IO with a 100% offset account asap and stop paying the loan down. I would also set up one or two LOCS on the property and talk to a tax advisor about using this to pay the interest on the loan. This will free up your cash where you should keep in the offset so that when you do buy the new PPOR you can have a greater deposit.

 

[chris1000]

Thanks Terry, I live in QLD so I understand that I will have to pay stamp duty. Im working on the basis that as I would only be transferrring 50% to my wife that I would only pay Stamp Duty on $400k - rather than the whole value (800k) of the house - is this correct?

Unfortunatley to late to take out I/O with offset as i will be making this happen over the next month or two.

So in summary will extend my current loan to 800k and change to I/O this will provide me with $400k capital against new PPOR - then convert current PPOR to IP and claim tax back on $400k for a month or two then transfer 50% of this into wifes name so she can claim tax back on $400k and I will still continue to claim tax back on the origional $400k. The reason for seperating the transfers of both properties was I want to avoid the possibility of the OSR aggregating the duties as discussed in another post - does this also sound correct? Thanks for your help