Name on title of ip for tax reasons ?

[Comet]

Newbie question re name on title for tax purposes.
In the process of first investment property.
Considering our best option for tax reasons is to have ip in my name.
Bank using mine and partners name on bank loan, but wondering how I have say 90% in my name and 10% in partner name is what bank suggested. Is this something I request when surveyor does settlement? Not sure if I have even worded this all right...

 

[marg4000]

You can buy the property in joint names as tenants in common with any percentage of ownership split you choose.
Marg

 

[Comet]

Thanks Marg that is what I was hoping to do
But how do I go about this ?
Do I let lawyer know or something an accountant has to organize ?

 

[Rolf Latham]

but wondering how I have say 90% in my name and 10% in partner name is what bank suggested. Is this something I request when surveyor does settlement? Not sure if I have even worded this all right...

Hi Comet

your conveyancer will be able to sort this out for you at the time of drawing the contract.

will depend a little on what state your buying in, in some states the real estate agent draws up the contract to your request.

, In any case I be ready concerned about taking advice from a banking on tax and accounting issues ( or a broker for that matter) without some sort specific personalised tax advice.


Thanks

Rolf

 

[Comet]

Thanks Rolf, yes you are right, must go see accountant this week to check a few things over, will shoot u an email later re some structure on loans if thats ok as bank quite vague about making any suggestions for this...



[QUOTE=Rolf Latham;879686]Hi Comet

your conveyancer will be able to sort this out for you at the time of drawing the contract.

will depend a little on what state your buying in, in some states the real estate agent draws up the contract to your request.

, In any case I be ready concerned about taking advice from a banking on tax and accounting issues ( or a broker for that matter) without some sort specific personalised tax advice.


Thanks

Rolf[/QUOTE]

 

[Aaron_C]

Having a 90/10 split might not be a good idea for tax reasons. If you are the primary income earner for the foreseeable future and the property is negatively geared, it might be best to keep everything in your own name. The bank would only suggest a 90/10 split because they want your partner to be a co-borrower to help you service the loan. But this may not suit what you want. If serviceability is an issue, just have your partner as a guarantor to the loan, not on the loan/title itself. That way you get all the deductions etc but use her income.

 

[jrc77]

Having a 90/10 split might not be a good idea for tax reasons. If you are the primary income earner for the foreseeable future and the property is negatively geared, it might be best to keep everything in your own name. The bank would only suggest a 90/10 split because they want your partner to be a co-borrower to help you service the loan. But this may not suit what you want. If serviceability is an issue, just have your partner as a guarantor to the loan, not on the loan/title itself. That way you get all the deductions etc but use her income.

Or ask your bank if you can have two names on the loan but only one on the title. We have an IP setup this way.

Regards,

Jason

 

[Aaron_C]

Or ask your bank if you can have two names on the loan but only one on the title. We have an IP setup this way.

No. Do not do this. You will run into problems if you get audited.

 

[Terryw]

You need legal and taxation advice.

Legal includes Estate Planning issues, bankruptcy, family law, equity, stamp duty, contracts etc.

Also, buying in the highest income earner's name may be short sighted - it may save you tax initially, but what about the more distance future.

 

[travelbug]

What are your reasons for wanting it in your name?

As Terry said- what about down the track? May work now but you have to consider life changes.

 

[Comet]

What are your reasons for wanting it in your name?

As Terry said- what about down the track? May work now but you have to consider life changes.

Thanks for all advice.
Property looking at purchasing will not be negatively geared for too long, Approx next 5 years if goes to plan and then should be neutral, and only out of pocket $50 a week while negative.
Both of us are in 30% tax bracket. Long term plan is that our current ppor will then be ip in approx 18-24m time. This ppor is already in partners name only so thought may be better for tax reasons to have property in question in my name so down the track one ip in each of our names. Any more advice welcome but will see accountant in the next week or so.

 

[Rob G.]

No. Do not do this. You will run into problems if you get audited.

Why not advise them to get advice from a registered tax agent etc. ?

TR 93/32 explains the position for joint owners of investments.

The names on the title are prima facie the proportions for tax purposes, unless it can be shown that equitable interests in the property are different from what is on the legal title.

Quite often other names will be on the loan for reasons of serviceability, etc.

The other person named on the loan or otherwise acting as guarantor should definitely get legal advice (sexually transmitted debt etc. etc.).

Cheers,

Rob

 

[cimbom]

My husband and I purchased an OTP apartment in both our names last year. However, we have since decided to have it either solely or mainly in my name, at least for the next five years, as I am in a higher tax bracket. After five years or so, once our income is more or less the same, we would like to have it in both names equally. What's the best approach for this?

Thanks

 

[jrc77]

Why not advise them to get advice from a registered tax agent etc. ?

TR 93/32 explains the position for joint owners of investments.

The names on the title are prima facie the proportions for tax purposes, unless it can be shown that equitable interests in the property are different from what is on the legal title.

Significant quote below ...

We consider that there are extremely limited circumstances where the legal and equitable interests are not the same and that there is sufficient evidence to establish that the equitable interest is different from the legal title. We will assume where taxpayers are related, e.g., husband and wife, that the equitable right is exactly the same as the legal title.

Regards,

Jason

 

[Terryw]

My husband and I purchased an OTP apartment in both our names last year. However, we have since decided to have it either solely or mainly in my name, at least for the next five years, as I am in a higher tax bracket. After five years or so, once our income is more or less the same, we would like to have it in both names equally. What's the best approach for this?

Thanks

You would have already entered a contract and changing names now could give rise to stamp duty again - even if before settlement. But because husband and wife are involved you may be able to change this around. So check with your lawyer about stamp duty before doing this.

In 5 years time you will be, probably, up for stamp duty again when you transfer half to your husband. You will be up for CGT too (assuming growth) unless an exemption applies. You would also need to redo the loans as the ownership is changing. Plus legal fees.

 

[Terryw]

Significant quote below ...

Originally Posted by TR 93/32
We consider that there are extremely limited circumstances where the legal and equitable interests are not the same and that there is sufficient evidence to establish that the equitable interest is different from the legal title. We will assume where taxpayers are related, e.g., husband and wife, that the equitable right is exactly the same as the legal title.

Regards,

Jason

I cannot think of any limited circumstances - perhaps if there is a person under a legal disability (such as being mentally disabled) and a parent owns the property in their name as trustee for them.

 

[Sacman]

Hi all,

I'm in the same boat. My wife and I have a IP in Perth and come tax time, we split 50/50 even though our incomes are split 85/15.

I guess my question is, how do I find out if the title has been set up as tenants in common? Also, I'm guessing it's a property lawyer I need to speak to? Do I need to speak to a Perth lawyer (since I live in Melbourne) or would a Melbourne lawyer do?

Thanks in advance.
Isaac.

 

[Aaron_C]

Hi all,

I'm in the same boat. My wife and I have a IP in Perth and come tax time, we split 50/50 even though our incomes are split 85/15.

I guess my question is, how do I find out if the title has been set up as tenants in common? Also, I'm guessing it's a property lawyer I need to speak to? Do I need to speak to a Perth lawyer (since I live in Melbourne) or would a Melbourne lawyer do?

Thanks in advance.
Isaac.

Hi Isaac,

All you need to do is get a copy of the certificate of title from the land titles office. You can ask your solicitor to get it for you or you can order it yourself. On the title it will show how the ownership structure is. If it says 'Joint proprietors' - that means that you and your wife have a 50/50 split. If, however, it says 'Tenants in Common with XXXX shares' then it will tell you the exact split.

Hope this helps.

 

[Sacman]

Much appreciated.

 

[Sacman]

Hi Aaron,

So I jumped on the Landgate website and was able to order a copy of the title for $24 and it was emailed to me straight away. Fantastic!!

All it does say though is "as joint tenants" no split specified. Do you know what this means in terms of the split come tax time?