Pros and Cons of a partnership

[Millions]

The 2 trustees of the 2 trusts would be legal owners as Tenants in Common so if 1 trustee were to sell their share to the other stamp duty would be payable on 50% of the value of the property = $1mil.

if they held it 60% / 40% and 40% was transferred then stamp duty would be based on $800,000 transfer value.

I should add that there are also land rich provisions which may apply to acquiring shares in a private company or a unit trust which owns land above a certain value - there could be different stamp duty treatment.

So make sure you get advice on something like this as a $2mil property could mean the trust is land rich.

Just to add another layer of complexity we are considering a corporate trustee as an agent/custodian for the partnership. This will be the entity name on title and will hold the bank accounts etc rather than a title showing 3 disc trusts as tenants in common. Would this confuse the transfer of ownership issue as it's not a straight forward transfer of one of the tenants in common?

Rather than go back and forth wasting your time perhaps I could contact you to discuss over the phone. If that's okay with you is the 02 number on your website the best one to use? Feel free to PM me if you would prefer I use another number.

Thanks again so much for all your help. Between here and another property investment forum you've been helping my wealth creation journey without knowing it for almost 10 years!

 

[Terry_w]

Just to add another layer of complexity we are considering a corporate trustee as an agent/custodian for the partnership. This will be the entity name on title and will hold the bank accounts etc rather than a title showing 3 disc trusts as tenants in common. Would this confuse the transfer of ownership issue as it's not a straight forward transfer of one of the tenants in common?

Rather than go back and forth wasting your time perhaps I could contact you to discuss over the phone. If that's okay with you is the 02 number on your website the best one to use? Feel free to PM me if you would prefer I use another number.

Thanks again so much for all your help. Between here and another property investment forum you've been helping my wealth creation journey without knowing it for almost 10 years!

Hi millions. I don't know the answer to this one and have never seen it in practice though I have heard about it. I will ask a property lawyer, but I suspect that stamp duty would be chargeable on the transfer from one trust to the other as these trustees would be considered owners.

 

[Millions]

Hi Terry,

Thinking about the administrative process and documentation, the corporate entity acting for the partnership technically wouldn't change on title so I'm not sure if there would be a transfer of land document created. The structure is actually 3 discretionary trusts as partners (bound by a partnership agreement) with another agreement between that partnership and the custodian entity - therefore if there was a change of ownership between the underlying discretionary trusts this wouldn't be shown on title, only reflected through amended partnership agreements.

The only way a transfer of land might occur (I would have thought) would be if the partnership custodian entity had to be dissolved along with the partnership if one person left and the others bought their shares. I am told that the partnership doesn't need to be dissolved (only amended) and therefore the custodian entity which effectively works as the trustee on title would stay the same.

I'm very interested to hear the outcome of your convo with the property lawyer though as the above sounds a bit too good to be true. Transfer of an interest in a property between commercial partners without stamp duty? Not likely

 

[Terry_w]

Hi Terry,

Thinking about the administrative process and documentation, the corporate entity acting for the partnership technically wouldn't change on title so I'm not sure if there would be a transfer of land document created. The structure is actually 3 discretionary trusts as partners (bound by a partnership agreement) with another agreement between that partnership and the custodian entity - therefore if there was a change of ownership between the underlying discretionary trusts this wouldn't be shown on title, only reflected through amended partnership agreements.

The only way a transfer of land might occur (I would have thought) would be if the partnership custodian entity had to be dissolved along with the partnership if one person left and the others bought their shares. I am told that the partnership doesn't need to be dissolved (only amended) and therefore the custodian entity which effectively works as the trustee on title would stay the same.

I'm very interested to hear the outcome of your convo with the property lawyer though as the above sounds a bit too good to be true. Transfer of an interest in a property between commercial partners without stamp duty? Not likely

The question would be is this 'dutiable property?'. In NSW a partnership interest is dutiable property if that partnership owns land. This would be dutiable transaction even if the title remained with the custodian.

 

[Millions]

Thanks for that.

And dutiable to the amount of only the value of the share being sold?