Maximising deductibility on ex PPOR

Greetings Dale and others,
The old forum had some discussions on transferring ppty between spouses, and particularly about the stamp duty concessions for such an event. However I've been pondering if such an arrangement could help maximise tax deductions... Hmm. Here's the situation.
Old PPOR, valued around $180k, tax-deductable loan of say $56k, non-deductible extra 50k. I think the ppty title is under tenants in common. (I'm sure this is important, but unclear of implications.) Currently leased at 200/wk.
Therefore: currently
Code:
                      My Share                   Wife's       Total
Value                     90                          90            180
Deductable               28                       28             56
Non-deduct               25                       25              50
If she could 'sell' her half to me at that price, and I could refinance with the bank then would we be in the following situation: I would have to retire the debt on her half -yes? So then we might be at this situation.
Code:
                            My Share           Wife's       Total
Value                     180                    0            180
Deductable           28+90=118                   0            118
Non-deduct                 0                      0             0
The left over 10k goes against new PPOR (again non-deduct) so that even after mortgage costs, taxes etc (presumably deductable anyway) I would have eliminated about $60k of non-deductable debt, and fixed the loan structure to boot. At that debt the ppty would be marginally -ve geared, but new house is much more affordable.
So... Am I dreaming? ;)

Many thanks
Luke
 
Hi Luke

This get's a little complicated so please bear with me . . .

You will have two halves, which will be treated separately for tax reasons. So, you will achieve a slightly better result in that your existing non deductible debt will remain non deductiible. However, the debt that your spouse had is possibly now deductible because of the "sale" of her half to you.

She will not pay CGT because of the property being a PPOR. You will have 1/2 PPOR exemption and another half subject to CGT.

Good luck

Dale
 
Thanks Dale.


Is there any difference in the advice you would give if the ownership was actually a Joint tenancy, not tennants in common?

Regards,
Luke
 
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