Tennants in common tax implication query

[ddan]

Hi all...Question around structuring of ownership and its tax implications.

Scenario:
-Wifey is off work atm watching new born, will not be going back to work till July 2014, once she goes back it will be on a part time basis.
- Wifey when fulltime earns around 70K
- I earn above 150K
- purchasing IP, for around 300K

Given the above what ownership structure would be best? individual ownership or joint ownership (joint tennants or tennants in common)?

If i go tennants in common, whats the thought process around who should have what share? Do I put my name down for say 70% as I pay the most tax? or is it vice-versa?

Thanks!

 

[Aaron_C]

Answer - no right answer!

 

[ddan]

DOH! was afraid of that!

 

[Terry_w]

The answer to this question will depend on about 10 to 20 different factors with each needing special consideration.

e.g. death
TIC - can be willed
JT passes to the survivor, generally.

When you die would you want your share to go to your spouse? What if she is younger and you die together in a car crash. Younger person is presumed to die first so your share may pass to her/him and from their out to the RSPCA via their will.

Or would you want your share to pass to a discretionary testamentary trust with restrictions to prevent it being accessed by new spouses or others unintended.

 

[Paul@PFI]

In all my years in tax I always hear "I wish I had"...applying to ownership. Problem with TIC and JT is both are fixed. Changing it later = stamp duty and other concerns.

If you buy TIC you will wish it was 1% / 99% now as wifey has no income when she goes back to work maybe 30% +. In ten years some issue will cause you to regret whatever you choose now....There is a fix.

Its one reason why a unit trust is often favourably considered. Depends where property is, your needs and much more. Unitholders can be changed later (ie wifey as a unitholder when she returns to work) without triggering duty. No legals either. It can also open up some favourable refinancing issues which may allow a refreshed higher loan !! Another UT benefit is the property can be acquired at a future date by a SMSF subject to many conditions but if you buy it in personal names it may be forever prohibited.