Joint ownership but with a single-name loan ...

[bennido]

I own an IP with my wife as joint tenants and currently we have a loan on it with both our names. So at tax time, we have to split the interest 50/50 when we are calculating our interest deductions.

However, if we refinance the IP loan into a single name (myself since I am the higher income earner), can I claim the full interest as a deduction ?

Technically, since my wife has no loan to pay off, her interest deduction will be $0 which is fine.

Is this idea feasible ?

 

[rugrat]

From my understanding, you would also need to sell your wifes half into your name, and pay associated costs etc.

 

[lizzie]

it's name on the property title - not on the finance - that determines tax.

 

[Jonathon]

If the property is in Melbourne, then transfers between spouses are stamp duty free.

As Lizzie has pointed out, the tax deduction is according to who owns the house, not who has the loan.

This may/probably will involve a new mortgage, so there may be break costs to consider? I'd suggest, if you haven't already, speaking to a good mortgage broker about it.

 

[Rob G.]

If the property is in Melbourne, then transfers between spouses are stamp duty free.

As Lizzie has pointed out, the tax deduction is according to who owns the house, not who has the loan.

This may/probably will involve a new mortgage, so there may be break costs to consider? I'd suggest, if you haven't already, speaking to a good mortgage broker about it.

That's good, now you only have to pay the CGT.

Cheers,

Rob

 

[bennido]

That's good, now you only have to pay the CGT.

Cheers,

Rob

Hmm .. that may not be so bad considering we bought the property fairly recently. Weighing against the benefit of being able to tax deduct the running costs (incl interest) at a much higher tax bracket, the legal costs might be worthwhile.

How do I assess a selling price that will be fair in the eyes of the ATO ? Will a RE agent valuation suffice or does the ATO have a board of preferred valuers ?

 

[lizzie]

if you're refinancing, you can use bank valuation.