transferring property

Hi, my father wants me to buy his property off him. He bought it in 1986 (so CGT applies for him). The property would be roughly worth $450,000. Is it possible for him to sell it to me for less then market value, say $300k? Does this have any effect on the CGT he has to pay? If i use it as an IP, can i claim interest deductions if i am able to buy for $300k? Thanks Jason.
 
Is it possible for him to sell it to me for less then market value, say $300k? Does this have any effect on the CGT he has to pay? If i use it as an IP, can i claim interest deductions if i am able to buy for $300k? Thanks Jason.

Hi, yes, you could buy the property for less than market value. However the arms-length rule will apply and capital gains tax will be based on the market value and not the sale price.

If you were to use this property as an investment then yes, the interest on funds borrowed to purchase the property would be deductible for you.
 
As dr.jauncey correctly pointed out, believe it or not, the ATO has already thought of this little "trick". ;) So yes, he can sell it to you for $300K, but tax, duty, etc is still payable on $450K.

How would they know? They may detect it at the outset via data matching etc, it may be subject to intervention after being flagged as a "non-arms-length" transaction, or it may be detected years down the track during an audit. In any case, the chances are it would eventually be detected, and you'd have to pay penalties on top of any taxes etc that would have been payable at the outset.
 
If it worth getting a valuation of the house done, just incase it is less then $450k? Does anyone know anyone that does Property Valuations in Brisbane on the forum? or do i just get it done from the Bank or Real Estate Agent?
 
As dr.jauncey correctly pointed out, believe it or not, the ATO has already thought of this little "trick". ;) So yes, he can sell it to you for $300K, but tax, duty, etc is still payable on $450K.

This comes to an interesting question, if for some unknown reason, the second owner who bought the property for $300K that need to sell with the same price in the next day, or next month, or next year, does the cgt still apply...:confused:

Super.
 
If it worth getting a valuation of the house done, just incase it is less then $450k? Does anyone know anyone that does Property Valuations in Brisbane on the forum? or do i just get it done from the Bank or Real Estate Agent?

My parents have been moving property into a family trust (long story) for a little while.

They have not had to pay for valuations, but only for an appraisal by a real estate agent with three comparable sales (within a certain time frame - three months?) to have a "market value" which is used for stamp duty and capital gains tax purposes.

This is regardless of whether they "sell" the house to the trust for $1K or $400K.
 
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