IP Tenants In Common Loan

Hi Somersoft,

This is my situation, I am in my early 20's and had saved up a healthy deposit. Due to still studying and not having a full time income I had difficulty gaining a loan but I wanted to do so in order to get in the property market a couple of years earlier and rent it out whilst studying and living at home. To do this when I finally purchased I took a loan out and had the title made tenants in common with my mum, we were told the minimum my mum has to have was 20%, so i have 80% and she has 20%. My mum has not financially contributed one cent in regards to anything to do with my property.

I know some of you will disagree with my choice to go about my purchase this way, but I am very happy I did it and have already learnt so much. My question relates to the process of removing my mum off the loan/title (which she is keen to happen sooner rather then later). I understand that she will technically be selling me her 20% and I will have to pay stamp duty and CGT on her behalf. The purchase price in August last year was 500k. Is this correct or is there a better way to remove her from the loan/title once I have payed the loan down a bit and have a greater income.

Also, as I have never lived in the property would I be able to claim FHBG in the future if I purchase again before living in my IP. Or can I claim it later?

Thanks in advance.
 
If you purchased the property after july 1 2000 and have never lived in a PPOR or claimed the grant, you can apply for the grant once you do purchase a PPOR. my understanding of the rest of your post is correct. you mum would have to pay CGT and you would need to pay stamp duty on the purchase when you take on the remaining 20%.
 
If you purchased the property after july 1 2000 and have never lived in a PPOR or claimed the grant, you can apply for the grant once you do purchase a PPOR. my understanding of the rest of your post is correct. you mum would have to pay CGT and you would need to pay stamp duty on the purchase when you take on the remaining 20%.

Thanks for the reply Tobe, but would buying the IP with mum having 20% of the title affect me claiming the grant in the future? and am I able to claim the grant if i turn the IP into a PPOR in a years time after mum is off the loan/title?
 
You would need to check with SRO, which is surprisingly easy, either email or phone call.

In my experience as long as you havent lived in this property (regardless of who was or wasnt on title with you), you can claim the grant for future properties. Likewise, if you have never lived in it until your solely on title you can then claim the grant. But dont take my word for it, give the SRO a call or get it in writing in an email.
 
I think as long as you haven't lived in it you are still entitled to the grant.

As for removing your mother from the loan - you can do that easily if you have enough equity in the property to buy her out.
 
If you don't want your Mum to pay CGT and you don't want to pay Stamps, and it is not important to you to get total control and ownership of the property right now, then you could wait for your Mum to decease (sorry :eek:) and her share will automatically pass to you (if you are the only beneficiary).
 
I think as long as you haven't lived in it you are still entitled to the grant.

As for removing your mother from the loan - you can do that easily if you have enough equity in the property to buy her out.

Thanks for the reply Aaron C, do I actually have to technically buy it out? As in does there have to be a transfer of funds? I will be paying the stamp duty on 20% of the value and I will also pay for my Mum's CGT.
 
If you don't want your Mum to pay CGT and you don't want to pay Stamps, and it is not important to you to get total control and ownership of the property right now, then you could wait for your Mum to decease (sorry :eek:) and her share will automatically pass to you (if you are the only beneficiary).

Thanks for the reply Propertunity, As horrible as it is to say I did know that was an option. But Mum's got a fair few years left (I hope haha) I'm only 22, I would really like to get full control and I also don't want to burden her and restrict what she can do with her finances do to this :)
 
What you can do is get a loan where you split it up - she is responsible for only 20%, you are responsible for 80% only. Then use other funds to pay down her loan to $0. That way you don't have to pay stamp duty or CGT.
 
You would need to check with SRO, which is surprisingly easy, either email or phone call.

In my experience as long as you havent lived in this property (regardless of who was or wasnt on title with you), you can claim the grant for future properties. Likewise, if you have never lived in it until your solely on title you can then claim the grant. But dont take my word for it, give the SRO a call or get it in writing in an email.

Thanks Tobe, I just checked out what the SRO was haha, I will email them, thanks again
 
What you can do is get a loan where you split it up - she is responsible for only 20%, you are responsible for 80% only. Then use other funds to pay down her loan to $0. That way you don't have to pay stamp duty or CGT.

except this doesn't remove her from the title, which was the purpose of the exercise in the first place.
 
What you can do is get a loan where you split it up - she is responsible for only 20%, you are responsible for 80% only.

best of luck with the fine print on the Shared prop products.

Its all nice fuzzy and warm marketing ............let a couple of these get to court for mortgagee possession and then lets see :) how much separation there is

ta
rolf
 
best of luck with the fine print on the Shared prop products.

Its all nice fuzzy and warm marketing ............let a couple of these get to court for mortgagee possession and then lets see :) how much separation there is

Indeed rolf it is definitely a peculiar product. All good if you make the repayments though.
 
except this doesn't remove her from the title, which was the purpose of the exercise in the first place.

No the purpose was to remove the mother of her responsibility...which would be the loan. Having a 20% stake in a property with no debt in your name is fine.
 
No the purpose was to remove the mother of her responsibility...which would be the loan. Having a 20% stake in a property with no debt in your name is fine.

I've re-read the OP and think I've caught up.

Wouldn't a 20% stake in the property with no debt have tax implications? It seems, since cmack is prepared to pay her CGT costs, he'd also pay for that, but surely over the years this could really add up.
 
No the purpose was to remove the mother of her responsibility...which would be the loan. Having a 20% stake in a property with no debt in your name is fine.

I actually want to remove her from the loan and title to be able to claim 100% of benefits and have full control. I only got mum on title/loan to get in the market a couple of years earlier
 
when did you purchase the property
if you get it revalued and its stayed the same or dropped then you wouldnt have to pay CGT
your best bet is to do it sooner than later if you can
 
when did you purchase the property
if you get it revalued and its stayed the same or dropped then you wouldnt have to pay CGT
your best bet is to do it sooner than later if you can

Purchased in August 2011 for 500k, so if no capital gain then no CGT, but no way to avoid stamp duty? Eg. there is no way mum can have her 20% transferred to me as a gift or something?
 
Purchased in August 2011 for 500k, so if no capital gain then no CGT, but no way to avoid stamp duty? Eg. there is no way mum can have her 20% transferred to me as a gift or something?

The only way to have the property transferred without Stamp Duty in this situation is via her death and having that property share transferred to you as beneficiary. The only other exceptions don't apply to you unless you establish that she bought the 20% stake as a trust for you, which you haven't indicated is the case.
 
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