Name on title for serviceability?

[albanga]

Hey Brokers,
Do you have to be on the title for a property (forgetting trust/company structures for now) to add to the serviceability?

An example may be better.
You want to buy a property with your wife but want the property in her name. Your wife however does not work so is unable to prove serviceability. You however can service the loan no problems.

Is it possible to not be on the title at all or would you need to be on at some capacity?

 

[Terry_w]

No.

With spouses one on title 2 on loan is possible.

Guarantees are possible with trusts and companies too.

 

[Rixter]

We have IP solely in wife name on title including loan and I am guarantor.

 

[Oshawott]

are there any benefits to this set up?

 

[Terry_w]

It allows a property to purchased in the name of a person who would not be able to get a loan to purchse on their own.

 

[Shahin_Afarin]

In a spousal arrangement can you have one entity on the title but both on the loan.

I recommend this set up every day of the week for servicing purposes.

Most lenders (with the exception of St Dragon and AMP) will take full debt and portion of the rental income.

 

[Oshawott]

so is this a way spouses can preserve their own borrowing capacity? or sm i misunderstanding. thanks

 

[Terry_w]

It hurts borrowing capacity as 2 are on the loan.

What it does is allows a property to be purchased in the name of a spouse who cannot afford it. This may be beneficial for a number of reasons:
1. asset protection (weak if the other spouse is paying the loan)
2. Estate planning
3. income tax, esp if positive cashflow soon
4. CGT savings on sale
5. allows for spousal sale strategy
etc

 

[albanga]

It allows a property to purchased in the name of a person who would not be able to get a loan to purchse on their own.

If the property is an IP is it also a benefit when the property is sold for the purpose of CGT? For example if I am on 100k a year and the wife on 0k and the IP is sold for say a gain of 50k then the CGT would be less?

Or for say a negatively geared property could you have the IP in your name for the deductions but when it comes time to sell just transfer to spouse? Or would this be illegal?

 

[Rolf Latham]

If the property is an IP is it also a benefit when the property is sold for the purpose of CGT? For example if I am on 100k a year and the wife on 0k and the IP is sold for say a gain of 50k then the CGT would be less?

Or for say a negatively geared property could you have the IP in your name for the deductions but when it comes time to sell just transfer to spouse? Or would this be illegal?

Yes to 1. And yes to 2. But u get to pay cgt on the sale to spouse

Ta
R

 

[albanga]

Yes to 1. And yes to 2. But u get to pay cgt on the sale to spouse

Ta
R

Hey Rolf,
Could you eloborate on 2? Are you saying you would need to pay CGT on the transfer to the spouse? If so would they also need to pay CGT when sold? Or is it valued on transfer and that is the base?

If so I sm guessing you would do this before a big CG event such as your about to develop on the property and want the big gain under the spouse name?
Or is my aim way off?

 

[Terry_w]

If the property is an IP is it also a benefit when the property is sold for the purpose of CGT? For example if I am on 100k a year and the wife on 0k and the IP is sold for say a gain of 50k then the CGT would be less?

Or for say a negatively geared property could you have the IP in your name for the deductions but when it comes time to sell just transfer to spouse? Or would this be illegal?

It is not illegal to transfer a property, but transferring = CGT event. Pointless as it would achieve no savings if the transferee sold quickly, but may be worth considering if it will be held for a while.

 

[albanga]

It hurts borrowing capacity as 2 are on the loan.

What it does is allows a property to be purchased in the name of a spouse who cannot afford it. This may be beneficial for a number of reasons:
1. asset protection (weak if the other spouse is paying the loan)
2. Estate planning
3. income tax, esp if positive cashflow soon
4. CGT savings on sale
5. allows for spousal sale strategy
etc

Hey Terry,
What about the cons with this set-up apart from the obvious negative gearing where it is beneficial the title is in the name of the highest earner?

 

[Terry_w]

Hey Terry,
What about the cons with this set-up apart from the obvious negative gearing where it is beneficial the title is in the name of the highest earner?

Cons on 1 name on title?
1. other has no legal interest
2. title holder could deal with property without the knowedge of spouse
- sell
- mortgage
- gift
3. On death title holder could gift entire house to mistress/RSPCA
4. Other spouse could go bankrupt and property still be attacked
etc

See my newsletters for articles on this.

 

[albanga]

Thanks Terry!
I am officially signed up for the newsletter, looking forward to the reads.