PPOR - What Name to Use

[H2hickster]

Hi All,
I have an IP in SA ($260k), Melb ($350k), and PPOR in country Victoria
($460k). This will be rented out in short ? medium term. May sell SA property in 2015.

All properties are in my name, as are the loans. I am the highest income earner. Wife works 2 days p.w. I have just purchased a new PPOR for $647k and need to determine whose name should go on the contract and hence title. Am leaning toward staying consistent and just having my name on everything. Should the property ever be rented (unlikely),then I can claim all costs in full.

Is it a big deal what name I use for the new PPOR. Any advice would be welcome. Any tips or future problems I should be aware of will be gratefully taken on board. Thanks

 

[Terry_w]

Yes it is a very big deal!

See my newsletters where I have discussed this.

Big deal in terms of asset protection, estate planniing, tax planning and future borrowings.

as an example. If you bought in NSW in 1 name, lived in it for 5 years and then decided to move out, that owner could sell 50% to the other owner at full market value and not pay any stamp duty or CGT. The transferree spouse could borrow to buy and thereby increase deductible interest on the total loan. Freed up funds could be used to pay for the new PPOR.

In effect you could be borrow to buy the new PPOR and have the interest deductible.

 

[Paul@PFI]

1. Joint Tenancy - Not recommended
2. Tenants in Common 50/50
3. Tenants in Common - Some other %?
4. Flexible ownership % - The ownership option that isn't on the contract. For an IP this may be a better option. Not a PPOR.

Each has + and -

The biggest minus is its expensive to change it later. In Victoria the existing (??) Duties Act is friendlier for a spouse transfer so perhaps its no big deal.

What is your asset risk like ?? Gynaecologist is high risk of liability. Public servant low risk.

 

[Greg Reid]

It generally depends on what you plan to do with the PPOR long term, as well as asset protection and estate planning as Terry stated.

If you are keeping your existing PPOR, it may be worth considering transferring title into spouse name name depending on numbers> In whose name will have a better after tax benefit, now and in the future when you may consider selling? Also consider land tax implications.

As to the new PPOR, joint names is typical, again depending on risk of being sued in your own right and estate planning. Paul rightly states Victoria has a favourable stamp duty policy in terms of transferring title to spouse if needed.

Without knowing your circumstances, I presume your name needs to be on a loan as joint borrower, most lenders will accept one name on title if required.

 

[H2hickster]

Thanks Geg, Paul & Terry,

I should have thought harder about asking such a sweeping question, with so many wotifs. All your answers are very helpful and most appreciated.

Terry, I have read your structuring newsletter and have a much better appreciation of the things I need to consider. Thank you.

I am employed in IT with wife a nurse, so should have low risk of being sued. Current PPOR has very low capital gain, so this probably not too much of an issue, but I will review.

The wise voices of Somersoft are very very helpful, and I thank you for sharing a few minutes if your time. I have learnt and continue to learn so much from you insightful answers to Somersoft questions. Thank You...