My partner's ownership predicament (help pls)

D

dave901

Hi all,

I have a bit of a strange situation that I would appreciate any advice on :).

My partner and I are planning (and saving) to begin our investment portfolio. I have never owned a property or taken out a loan/mortgage myself. My partner however, has her older sister's home listed under her name. This happened when she was younger, to take advantage of my partner's FHOG. Her sister doesn't invest, she only owns this house.

Now, my partner and I are wanting to plan for our own investment future. So in my opinion, we need to understand exactly what her financial record looks like - but her sister is being difficult with providing us the paperwork. We just need to understand the situation - we aren't going to try and steal her house or anything, but it is surely my partner's right to see any documentation with her name on it. Her sister is also planning on selling the house very soon.

I am not very knowledgeable about the situation, but I imagine there would be implications for us in terms of sourcing finance for our own investments and possibly some other factors too. Can anyone please help me to understand:

1. What documentation we need from her sister to fully understand the situation with regard to my partner's financial record?
2. How we should go about getting this information if her sister will not give it to us voluntarily?
3. What are the implications for us considering my partner has her sister's house in her name?
4. What happens when the house is sold, will my partner then be "free"?
4. Is purchasing everything in my name only a good idea, or should that only be a last resort if my partner's record is adversely affected by this situation? That would reduce our borrowing ability too, I imagine?
5. Is there anything else we need to consider here? Or any suggestions for us?

We just want to understand the situation that she is in and how it will affect us when planning our investment portfolio. We have no intent to cause any issues, but it is surely our right to have all necessary information disclosed to us so that we can understand the situation.

Any advice is greatly appreciated. Thanks in advance!
Dave
 
Do you know if the loan (if there is one) is under her name? If so that could affect your borrowing capacity.

If it's all paid off AND under her name, you might be able to borrow like crazy against it. Maybe this is why her sister is paranoid:)
 
Capital gains tax may apply.

The sale could leave you with a tax liability so it would be a good time to have a sit down discussion with your family and an accountant to fully understand the situation.

My personal choice would be to transfer it or sell it to keep things clean before you start your own investing.
 
We are trying to find out if the loan is in her name and where they are at with paying it off, but we won't be borrowing against it... lol
 
Who is going to pay the Capital Gains Tax? Whose tax return will it go on? If the sister's, the ATO will ask your partner where the capital gain is. Your partner will say we only did it for the first home owner's grant. Your partner and her sister are in some very brown water without means of propulsion.
 
dave901 said:
This happened when she was younger, to take advantage of my partner's FHOG. Her sister doesn't invest, she only owns this house.
Click to expand...

I don't understand why the sister didn't buy in her own name and take advantage of her own FHOG...? Or had she previously bought (and sold) property?
 
There may be a trust issue as well as contingent tax concerns - You should seek legal advice.

- Land tax
- CGT
- Fraud (FHOG fraud that is)
- No access to CGT main residence concessions

Fixing this issue may involve costly stamp duty. Not a clever plan whoever conceived of it. Its basically a scheme.

I would check with Terry Waugh
 
Thanks guys, I need to do more digging. But I believe she is the sole "owner" of the house, however her and the sister's brother are on the loan. They plan to sell soon - it was a PPR so presuming it would be exempt from CGT...

If her sister is not forthcoming with the information, how can we go about getting the information we need? contact the bank providing the finance?
 
dave901 said:
Thanks guys, I need to do more digging. But I believe she is the sole "owner" of the house, however her and the sister's brother are on the loan. They plan to sell soon - it was a PPR so presuming it would be exempt from CGT...

If her sister is not forthcoming with the information, how can we go about getting the information we need? contact the bank providing the finance?
Click to expand...


I wouldn't presume anything. This is a pretty complex issue. Even down to the PPOR being exempt from CGT - there is a timing issue around that as well.

I'll let the legal eagles swoop in (see what I did there? ;) ), but I would be seeking some decent advice and be bracing for some relief of funds of yours.

pinkboy
 
dave901 said:
Thanks guys, I need to do more digging. But I believe she is the sole "owner" of the house, however her and the sister's brother are on the loan. They plan to sell soon - it was a PPR so presuming it would be exempt from CGT...

If her sister is not forthcoming with the information, how can we go about getting the information we need? contact the bank providing the finance?
Click to expand...

If your name is on a property title or a loan and you are not aware of this, then it is very concerning.

How does this even happen?
 
These sorts of things happen sometimes.

It is a bare trust type arrangement which is probably not documented because it was used to claim the FHOG (potentially fraudulently).
There are 2 types of interest a person can have in a property. One is a legal interest ? name on the title is the legal owner. The other is a beneficial interest ? an interest that is not a legal interest.

Any lender is going to require the legal owner to be on the loan. Unlikely the sister would be on the loan, but possible.

I would suggest doing a title search, find out whose name is on the title, find out which bank has a mortgage over the property and then ring them up and request account details, change of address for statements etc.

Tell the sister, nicely, that it is probably the time to sell or transfer title. CGT would be payable by the sister ? if you could establish the trust to the ATO, but probably can?t so your partner may be liable. Main residence exemption may not apply if your partner hasn?t lived in it.
Similar with stamp duty, transfer to the sister will result in duty unless she can establish the trust relationship. Will need to prove that the sister paid the deposit, and the loan amongst other things.

This has the potential to get very messy quickly so may be best to exist asap.

Buying in your name may be an idea worth considering
 
Appreciate the advice. It is an unfortunate situation - it happened about 10 years ago (the purchase).

The sister is saying that they will sell the house soon, pay off the rest of the mortgage, and she will pay the CGT and any other fees out of the sale funds (there is significant equity in the house).

Then my partner will not have her name associated with the property or loan. Will that actually clear up the situation? Or are there other implications she is missing?

If/when myself and my partner apply for a loan together in the future (after this property is sold) what could be the potential ramifications?
 
Re:

I have obtained a copy of the Title Search, and my partner is the sole owner and the mortgage is under her name. There is no trust structure.
 
dave901 said:
I have obtained a copy of the Title Search, and my partner is the sole owner and the mortgage is under her name. There is no trust structure.
Click to expand...

Then your partner can request all the information she needs from lenders, etc no matter what the sister says.
 
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