Converting PPOR to joint names

[TEG]

HI,

I bought my PPOR a few months ago while I was single (PPOR mortgage is in my name only). I am now engaged and due to be married towards the end of the year. After I get married, I am considering changing the mortgage to be in joint names.

Currently I do not own any IP's, but plan to acquire future IP's and own them in joint names.

Does anyone see any potential pitfalls to changing the PPOR mortgage to joint names?


Thanks.

 

[Aimjoy]

HI,

I bought my PPOR a few months ago while I was single (PPOR mortgage is in my name only). I am now engaged and due to be married towards the end of the year. After I get married, I am considering changing the mortgage to be in joint names.

Currently I do not own any IP's, but plan to acquire future IP's and own them in joint names.

Does anyone see any potential pitfalls to changing the PPOR mortgage to joint names?


Thanks.

Hi TEG,

There is probably no advantage in doing so. Even if there are no GCT implications (if there has been no CG) then there will be other costs involved. Your new wife will be entitled to half of all your stuff if you get divorced (or more if you have kids) and all your stuff if you die.....so no real benefits.

Additionally, IF you are the main income earner AND you convert this PPOR into an IP down the track sometime, then it would be more tax effective to leave it in your name only.

You would only own future IPs in joint names if you were both on good incomes and paying healthy amounts of PAYG tax. Remember if your wife stops working to have a family then you can only claim half the IP expenses while she racks up tax losses that can't be used until she earns an income again.

You might?? be better off with other structures like trusts and so on - but you would need to investigate these before setting them up....seek professional advice.

My 2c - not professional advice by any means.

Aimy

 

[TEG]

Your new wife will be entitled to half of all your stuff if you get divorced
Aimy

Well, the LVR for the PPOR is 95%, so there is not too much equity in this property. She will help me pay the PPOR mortgage, so it seems more fair to have the mortgage in joint names.

 

[alexlee]

Well, the LVR for the PPOR is 95%, so there is not too much equity in this property. She will help me pay the PPOR mortgage, so it seems more fair to have the mortgage in joint names.

She'll get half regardless of whose name it is in, surely. The LVR is 95% FOR NOW. In time, there will be equity.
Alex

 

[steveadl]

Don't see much point in changing the name on the title.

If it turns into an IP in the future, you can claim all the tax benefits on your income. If your future wife is on a good income as well, then buy the first IP in her name only and she can get all the tax benefits for that one.

I'll be in the same situtation when I get married - 4 in my name, and 1 in GF's name. No point in changing it, and any future IP's will probably also go in my name as I'm on the larger income, and she would be going to part time/no work when the kids come. In the big scheme of things it doesn't really matter who's name it's in - if you're happily married, who cares? If you're getting a divorce, assets get split up regardless of who's name they're in.

 

[Aimjoy]

Well, the LVR for the PPOR is 95%, so there is not too much equity in this property. She will help me pay the PPOR mortgage, so it seems more fair to have the mortgage in joint names.

TEG,

That's all very noble of you - but completely unnecessary (as the others have said too). It just achieves nothing (becasue she's entitled to a share anyway) and limits what you can do tax-wise in future (if it becomes an IP).
Are you going to put the car in joint names too - it kinda becomes a ridiculous argument after a while.

All the best with the future marriage btw.

I suspect you may well end up with a new PPOR after marriage at some point. Wives have this habit of wanting to nest in something they have had a part in choosing - so don't be disappointed if that turns out to be the case.

Aimy.

 

[TEG]

Thanks everyone for the replies

Yes, I do intend to turn this PPOR into an IP in the future. From a tax perspective it makes sense to leave the PPOR solely in my name.

Thanks for helping me clarify this issue.

 

[Aimjoy]

Yes, I do intend to turn this PPOR into an IP in the future. From a tax perspective it makes sense to leave the PPOR solely in my name.

Well just one final suggestion then.....don't pay off any of the loan principal. Try to convert your existing mortgage to IO (if you are not already doing so) as this will maximise your IP debt and therefore its tax deductibility as an IP in future.

Aimy

 

[wylie]

And wouldn't it be a good idea to put any spare funds into an account offset against your loan so you don't pay so much interest, but it leaves the loan higher for when you do want to buy another PPOR and turn this first one into an IP?

 

[asdf]

Sorry to hijack your thread mate. Any accountants or family lawyers out there who can opine on this?

In the event of a divorce, can a transfer of an asset solely in my name (rather than joint) to my ex-spouse be exempt from transfer duties? Probably depends on the state I suppose.

I would also assume that if it was an IP that was transferred that CGT would be payable too on market value of transfer. Ohh, I can see it could get messy, especially if its not amicable split and the wife wants you to value assets up but you don't. Lesser of two evil... ex wife or ATO... stuffed either way.

 

[Raddles]

Hi there ASDF
if you get consent orders from the family court - then assets transferred pursuant to those orders should have rollover relief from cgt and should have an exemption from stamp duty.
Check the family court site for the DIY consent orders
thanks

 

[MissMuffitt]

My bank at the time (Homepath) before they would lend us money for this house in Gladstone, made me get both names on the house I had in Nanango that was originally only in my name. We had to pay stamp duty at the time too, was not happy about it at all.
This was to do with security they told me and that hubbie was the main earner and they would not lend us the money till we had changed it into both names.

I am sooo glad to be rid of Homepath.

 

[asdf]

Hi there ASDF
if you get consent orders from the family court - then assets transferred pursuant to those orders should have rollover relief from cgt and should have an exemption from stamp duty.
Check the family court site for the DIY consent orders
thanks

Thanks Raddles will check it out. Not that I'm looking to get divorced but good to know for sucession planning...

 

[valleymist]

I suspect it is possible for a ppor owner to sell the property without the consent or knowledge of their spouse.

If the seller then leaves the country with the loot, or loses it at the casino prior to declaring bankrupcy, the spouse will have trouble getting a fair deal in case of divorce.

Putting ppor in joint names has some advantages.

 

[regrow]

Hi asdf

I spoke to a solicitor at a gathering I was at who was actually going through this with his wife. They didnt want to get divorced but wanted to sell their IPs, so were going through with the divorce so as they wouldn't pay the CGT.

I spose they could then get remarried and start buying IPs again. Not sure I'd go to that trouble.

Regards

Regrow