Divorce Settlement

My husband and I are considering a transfer of property (between ourselves) for the purposes of a legal property settlement. I understand that there is no stamp duty payable when transferring property between spouses in the event of marriage breakdown.

I would like to transfer our investment property to my husband. However, he will need to pay me out some additional funds (around 40K) to me. My question is?
If he borrows additional funds against the investment property to pay me out my share, will the interest on that additional borrowing be tax deductible for the future? He will be continuing to hold the IP, earn rental income etc in his own right

Thanks
 
This issue requires personal legal advice. Only a binding agreement which is court approved may satisfy the exemptions for CGT and stamp duty. Your lawyers would understand this issue.

The loan would not be deductible.
 
I agree with Paul that the interest won't be deductible if it is done under a family law settlement. This is because the ATO considers the borrowing a private expense.

Depending on the situation it may be better to transfer normally (i.e. not under a family breakdown). Some states allow duty free transfers between spouses (not sure if you are still classified as spouses). but this may make a worse CGT outcome from you.
 
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