Tax treatment for property - previously 50/50 owned with ex now 100% my name

[Cpci]

Hi,

I am planning on seeing an accountant soon but thought I'd ask some advice anyway...

Here's the situation:
- IP property purchased in 2009 with then spouse 50/50 ownership
- we divorced in 2012 but could not sell IP without making big loss (house now valued at 20% less than purchase price)
- property transferred into my name only in Jan this year (we wanted to have our finances separate)
- before transfer both my ex and I decreased the mortgage I would have to take on by paying $15k each (total $30k) previous mortgage. I then refinanced concurrent to the transfer
- property has been tenanted from day one
- property is negatively geared

Questions:
- do I need to have two rental schedules for the IP in my tax return? One showing 50/50 ownership until Jan and one showing 100% from Jan?
- can I claim loan establishment fees etc from the initial purchase in 2009 as well as the fees from this years loan establishment? Or does that reset with the recent transfer?
- are there any CGT tax (loss) impacts regarding the transfer - For my ex or me? The transfer consideration was only $1.
- would this transfer impact the depreciation schedule?
- is there anything else I should be aware of in this situation?

Thanks

CPCI

 

[whimsical75]

- do I need to have two rental schedules for the IP in my tax return? One showing 50/50 ownership until Jan and one showing 100% from Jan?

Yes

- can I claim loan establishment fees etc from the initial purchase in 2009 as well as the fees from this years loan establishment? Or does that reset with the recent transfer?

Original loan establishment fees will be unchanged (ie remain at the 50%). New fees will be 100% you.

- are there any CGT tax (loss) impacts regarding the transfer - For my ex or me? The transfer consideration was only $1.

Possibly, but not based on the $1. Any CGT will be based on the value of the property at the time of transfer - the actual amount paid is irrelevant if it isn't market value.

- would this transfer impact the depreciation schedule?

Yes. Use the same original depreciation up to when you purchased it and then you would claim 100% of the remaining items from when you bought the balance of the property. You don't need a new schedule done as you won't be able to revalue the depreciation as you already owned part of the property.

 

[Terry_w]

Hi,

I am planning on seeing an accountant soon but thought I'd ask some advice anyway...

Here's the situation:
- IP property purchased in 2009 with then spouse 50/50 ownership
- we divorced in 2012 but could not sell IP without making big loss (house now valued at 20% less than purchase price)
- property transferred into my name only in Jan this year (we wanted to have our finances separate)
- before transfer both my ex and I decreased the mortgage I would have to take on by paying $15k each (total $30k) previous mortgage. I then refinanced concurrent to the transfer
- property has been tenanted from day one
- property is negatively geared

Questions:
- do I need to have two rental schedules for the IP in my tax return? One showing 50/50 ownership until Jan and one showing 100% from Jan?
- can I claim loan establishment fees etc from the initial purchase in 2009 as well as the fees from this years loan establishment? Or does that reset with the recent transfer?
- are there any CGT tax (loss) impacts regarding the transfer - For my ex or me? The transfer consideration was only $1.
- would this transfer impact the depreciation schedule?
- is there anything else I should be aware of in this situation?

Thanks

CPCI

Was this done on the basis of a court order or a binding financial agreement or otherwise related to the separation?

If so you will probably inherit any CGT of the property (hope you took this into account in your settlement). ie. your cost base will be the same as your partner's when they acquired the property.

Other than this think of the property as being 2 halves. You acquired 50% before and another 50% later. Mortgages must have been discharged and new loans taken out etc when the transfer occured.

 

[Paul@PFI]

Hi,

Questions:
1. do I need to have two rental schedules for the IP in my tax return? One showing 50/50 ownership until Jan and one showing 100% from Jan?
2. can I claim loan establishment fees etc from the initial purchase in 2009 as well as the fees from this years loan establishment? Or does that reset with the recent transfer?
3. are there any CGT tax (loss) impacts regarding the transfer - For my ex or me? The transfer consideration was only $1.
4. would this transfer impact the depreciation schedule?
5. is there anything else I should be aware of in this situation?

Thanks

CPCI

Marital seperation and relationship breakdown are messy and this is quite typical. The practical way that CGT and income tax address this situation is that your former partmer is deemed to have never been an owner and that you were the owner from day one. Marital breakdown is a "rollover" issue. Her cost base rolls back to you. You acquire the other portion of the cost base.

I would check and ensure you both adopt the same tax position for this ie : dates, values etc cause if you dont one of you will make a costly tax mistake. If you both do same thing the issue is trivial. Agree on the date she ceases to own and you acquire the 100% - Based on the loan paydown etc Jan seems to be right.

Two schedules ?? Probably. The "new" loan is yours. The old loan was joint. To address that question you and fmr partner can claim all the unclaimed loan fees that havent been deducted yet on one schedule. Then on new schedule you alone start to claim new loan fees over 60 months (or loan term if its less).

Your fmr partner has no CGT event. Basically your cost base doubles + perhaps some extra legal costs etc.

Depreciation schedules etc dont change. Just the amount of your deductions. You will have a 100% depreciation claim from jan onwards.

Paul
www.pricefinancial.com.au