Spousal sale - PBR required?

[Trogdor]

Hi experts,

1. If (in Victoria) one is contemplating a spousal sale, should one get a PBR ahead of doing this?

2. How long does a PBR take to procure?

3. How much does it cost?

4. Can any accountant prepare it, or is it a specialised field?

Cheers.

 

[Terry_w]

Sounds like you might be wanting to do this with tax in mind. It would be a very good idea to get a PBR.

You should also seek legal advice on the many legal aspects. Also make sure you do it properly or the interest would not be deductible at all - I've seen 2 forum members who stuffed things up

 

[Trogdor]

Thanks Terry.

When you say "Also make sure you do it properly or the interest would not be deductible at all - I've seen 2 forum members who stuffed things up " what do you mean by properly - and how did they stuff this up?

Also, how much does a PBR cost (approx ballpark) to obtain and how long?

Thanks

 

[Terry_w]

Thanks Terry.

When you say "Also make sure you do it properly or the interest would not be deductible at all - I've seen 2 forum members who stuffed things up " what do you mean by properly - and how did they stuff this up?

Also, how much does a PBR cost (approx ballpark) to obtain and how long?

Thanks

Main thing they did was have one spouse gift to the other. Not deductible

I think you would expect to pay $500 to $1000 for a lawyer or accountant to prepare and lodge for you. An answer is supposed to come back within 28 days - from memory.

 

[Trogdor]

Thanks Terry.

Can't see why you'd gift. In my mind the steps appear to be:

- Purchasing Spouse takes a loan for 80% of the purchase price with bank (based on bank val, etc..), and get lawyer / conveyancer to transfer title in consideration of the purchase price (100%, funded by debt and equity - real or notional transfer for equity?) with a proper contract of sale (lawyer / conveyencer does s32, etc..).
- At settlement selling spouse gets funds
- Loan from purchasing spouse may need selling spouse to go guarantor, assume this is no issue (presumably better than being co-borrowers which could cause issues). Thoughts on this?

Can any accountant do this? I've just looked on the ATO website, form looks very simple!

Thanks.

 

[Terry_w]

Yes, i can see a few issues.

Any accountant could do a PBR, but you would probably want to use someone who knows a bit about property and tax.

You shouldn't use a conveyancer either as you need legal advice on various aspects.

Why not borrow 104%?

 

[Trogdor]

Thanks Terry.

How do you borrow 104%? Does this involve cross collateralising another property? If its cross collateralising with the PPOR, which I assume is the case (which the funds will be applied to reduce non-deductible debt on) is this all legitimate?

 

[Terry_w]

104% would depend on the situation, could be done without cross collateralising.

 

[geoffw]

Forgive my ignorance but I'm not quite sure what PBR is. Google gives me professional bull rider, plant breeder rights and Pabst Blue Ribbon beer, but I suspect that none of those apply. Some sort of private ruling perhaps?

 

[Terry_w]

Forgive my ignorance but I'm not quite sure what PBR is. Google gives me professional bull rider, plant breeder rights and Pabst Blue Ribbon beer, but I suspect that none of those apply. Some sort of private ruling perhaps?

Private Binding Ruling.

 

[Aaron_C]

See a solicitor about it for *** covering. Don't forget you need to establish that the predominant purpose isn't a tax one otherwise Part IVA can apply and kill the transaction.

 

[Risky Business]

Sounds like you might be wanting to do this with tax in mind. It would be a very good idea to get a PBR.

You should also seek legal advice on the many legal aspects. Also make sure you do it properly or the interest would not be deductible at all - I've seen 2 forum members who stuffed things up

As per what Terry said. I have a PBR where gifting from my spouse to me via state stamp duty exemption was not to be deductible. It's a longer story than this, but as Terry said, get a PBR before you proceed. We did, and decided not to proceed.

 

[Paul@PFI]

An answer is supposed to come back within 28 days - from memory.

LOL....LMFAO ......The clock will stop and start many times. You will get a constant stream of questions seeking clarification or additional facts. Each stops the clock. The ATO will also seek other views from other areas of tax law. That stops it and restarts it too. If it comes through in 90 days buy a bottle of bubbly and celebrate. You would be one of few.