Ex partner forcing the sale of an investment property?
- Thread starter rjdee1
- Start date
i factored the offer i made to him based on the fact that he will no longer need to pay CGT as he is selling it to me due to a breakup, if he has to pay it, I have to offer him more. Its my error, but its now something else that i will have to pay for. I told him he wont have to pay real estate costs or CGT, I was wrong, he will have to pay CGT, now I just need to figure out how it will be calculated.
Your post struck a chord with me. At 22 my fiance broke up with me, about three months after we had purchased a property together (in both names of course).
What did I do? Well, after drying my tears (at least the first ones anyhow!) I packed up my gear and moved back in with my parents. Not a lot of fun when I'd been living out of home for three years, but it was cheap! We had a tenant in the property, so he continued on, and my ex and I split the gap between the rental income and expenses 50/50.
I was happy with this for a time but after a while I wanted to disentangle myself from him - we'd both well and truly moved on, and I felt ridiculous owning a property with my ex-fiance at 23. I approached his mother (whom I had a very good relationship with) and proposed I buy him out, for $2K and payment of all settlement costs. (To put this into perspective, the unit we bought was $58K. This is back in 1997, mind you.) He was short on money (and perhaps short on brains also) and accepted, so settlement went through and I became the sole owner.
The profit from this unit (when I eventually sold it) went towards the purchase of my current property (which my husband and I bought together in 2005) as it covered the (substantial) stamp duty costs (about $25K). We've since gone on to own four additional properties. Basically it laid the foundations for our financial start in property.
And my ex? Well, he bought and sold another property, all before 2000, then went overseas to Japan for a couple of years and met his wife. When they came back, they found that they couldn't afford to get back into the market at the level they wanted to. I'm not a saint, every so often I think that this is some kind of karma after the way he treated me.
Anyhow, I just wanted to let you know that 'it does get better'and that your actions now can have a big impact on your life, even in 10 or more years' time. Good luck!
I love this story Jen, it sounds a lot like the start of my story! Hopefully my ending is just as happy
wylie - GST? I think you need thicker glasses!
rjdee1 - he (you) won't have to pay CGT if he is willing to use the 6 year rule for this property.
rjdee1 - he (you) won't have to pay CGT if he is willing to use the 6 year rule for this property.
Thanks Mark, I have been on the ATO website awhile ago about CGT but found it very confusing. Does the 6 year rule still apply if we lived in it for 2 years, then for 6 months he lived in it and rented the other two rooms out while he was living there (i rented a 3rd and he rented a 3rd) and for the past 6 months it has been a completely rented out IP? I think i remember reading something about him living there while renting it out effecting the rule? I dont know much about it really.
rjdee1, it seems you're golden. From the ATO website:
The property must have been your main residence
To qualify for a full CGT exemption, the property must have been your main residence from when you acquired it. If you move out of the property and rent it out, you can continue to claim an exemption from CGT for up to six years after you move out. If you do not rent it out, you can claim a CGT exemption for it for an indefinite period after you move out.
The property must have been your main residence
To qualify for a full CGT exemption, the property must have been your main residence from when you acquired it. If you move out of the property and rent it out, you can continue to claim an exemption from CGT for up to six years after you move out. If you do not rent it out, you can claim a CGT exemption for it for an indefinite period after you move out.
i don't know if mark's made it any easier to understand.
the 6 year rule is that if you live in a property that is your ppor (main residence), and move out and rent it - you can still claim it as your main residence for a further 6 years - as long as you don't claim anywhere else as your main residence.
it means, if you moved out into rental accomodation (or back with your parents), you can still claim it as your main residence for a further 6 years (ie, no cgt payable).
if you moved out and bought another house, you can only claim either you new house or old house as your main residence (ergo, which one you won't pay cgt on when selling), not both, but it is your choice which.
so may not have cgt to pay if moved out into rental/home.
good luck with it all.
the 6 year rule is that if you live in a property that is your ppor (main residence), and move out and rent it - you can still claim it as your main residence for a further 6 years - as long as you don't claim anywhere else as your main residence.
it means, if you moved out into rental accomodation (or back with your parents), you can still claim it as your main residence for a further 6 years (ie, no cgt payable).
if you moved out and bought another house, you can only claim either you new house or old house as your main residence (ergo, which one you won't pay cgt on when selling), not both, but it is your choice which.
so may not have cgt to pay if moved out into rental/home.
good luck with it all.
I have read any of the above, so sorry if I am repeating things.
For CGT It doesn't necessarily have to be through the court order
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.75.html
just as long it is an irretrevable marriage/relationship breakdown (you could even be still living together).
Bear in mind the CGT is avoided by the party bailing out, but the remaining party will be assessed on the whole capital gain since the purchase of the property - so you need to factor CGT into any separation calculations.
For stamp duty, in NSW anyway, you just need a court order, or a binding financial agreement, or satisfy the commissioner:
http://www.austlii.edu.au/au/legis/nsw/consol_act/da199793/s68.html
Well i think he has the right also of that property because both of you have paid for it, why not try to negotiate with him, instead, you are going pay him half of the selling price of the property. or arrange some settlement about it.
