sale to spouse

[magich2o]

Hi all,

I've been a lurker for awhile and have found this forum to be really useful... I've got a few queries that I hope someone can answer.

If a property was sold from one spouse to another, can the recipient spouse then refinance the house to the full current market value and then claim the full tax loss on the house? As this sale is between spouses, there is no stamp duty charged.

Is there anything wrong with the above arrangement?

If not, then wouldn't it be a good idea to buy properties in one name only and then sell it to the other spouse when a property starts to become positively geared? Obviously there would be CGT involved but if the property was or had been a PPOR, it may still be worthwhile.

Rgds Magic

 

[asy]

Sorry Magic,

I hate to ask, yet again, but will people PLEEEEEEEEEASE put a location in their profile, it makes it SO MUCH EASIER to answer questions...


But I digress...

Stamp duty IS charged on sales between spouses UNLESS there is a court order (Such as a consent order) in place.

PLEASE CHECK THIS INFORMATION.

But I believe it to be true. (Happy to be proven wrong, though)

asy

 

[Fester]

Do you mean the property was in joint names and you placed
it in one name only, or she paid you out? I organised, through a solicitor, to have our PPOR placed in my name only for Investment and finance purposes a while back. I paid no stamp duty, in fact, the whole procedure cost me only $400. That is in SA anyway!

 

[magich2o]

Sorry.. have updated my profile - it'll help if we make the Location field mandatory....

As for stamp duty, check out the following extract from the Duties Act 2000: (http://www.dms.dpc.vic.gov.au/l2d/D/ACT01816/2_0.html)

(3) No duty is chargeable under this Chapter in respect of a transfer of dutiable property from one person to another person, or from two people to one of them, or from one person to themselves and another person if--
(a) the people are spouses or domestic partners of each other; and
(b) no other person takes or is entitled to take an interest in the property under the transfer.

I've also called up the SRO and confirmed that no stamp duty is payable. While I was there, I also found out that no stamp duty is payable if a parent gifts a property their children in consideration of an upcoming marriage....

Magic

 

[asy]

Oooooh!!!

FANTASTIC!!!

Always happy to be proven wrong! hehehe

It is just that I remember that we had to word the transfer docs in recent ppty settlement to reflect the consent orders.

That's great news!

(And thanks for updating the location.. hehe)

It is an interesting question about moving property between partners to maximise tax effectiveness...

CALLING DALE!!!

Hmmm... Just adds to the depth of possibilities!

asy

 

[michaelg]

Hi,

Maybe Dale could answer this one (out there Dale?)

What if the property is transfered into a trust?, in my mind the current owner would have to be the sole beneficiary?, or would it be possible to have multiple beneficiaries in this case?

Michael G

 

[DaleGG]

Hi!

Originally posted by magich2o
Hi all,

If a property was sold from one spouse to another, can the recipient spouse then refinance the house to the full current market value and then claim the full tax loss on the house? As this sale is between spouses, there is no stamp duty charged.

Is there anything wrong with the above arrangement?

If not, then wouldn't it be a good idea to buy properties in one name only and then sell it to the other spouse when a property starts to become positively geared? Obviously there would be CGT involved but if the property was or had been a PPOR, it may still be worthwhile.

Rgds Magic

If the spouse already owns 1/2 of the house, then, the spouse will only be able to claim 1.2 of the refinance costs such as bank interest plus the existing half of any loan prior to the transfer.

Your idea is not too silly in transferring properties between spouses at certain times. However, buying within a trust in the first place is better again.

Cheers

Dale

 

[DaleGG]

Hi Michael!

Originally posted by michaelg
Hi,

Maybe Dale could answer this one (out there Dale?)

What if the property is transfered into a trust?, in my mind the current owner would have to be the sole beneficiary?, or would it be possible to have multiple beneficiaries in this case?

Michael G

I have never been "out there" . . . well, not that I can remember anyway which is a little bit of a concern!!

Transfers into a trust will attract both stamp duty and CGT which often detracts from the process. To the best of my knowledge, there is no way to do so without paying stamp duty - in Victoria anyway.

There used to be a way, but, this loop hole was closed off a while ago.

Have fun

Dale

 

[Bobq]

Don't forget that stamp duty is a State/Territory duty. As such it varies from place to place. While not a lawyer, the A.C.T. spouse exemption, for instnace, only 23appears to apply to the PPOR and even then under very limited circumstances.

Bob