Turning PPOR to IP and refinance

[aal04]

(NSW)

Heard this a few times id imagine. Turn PPOR into IP and refinance to help PPOR. We know you cant claim tax deductions on money borrowed if it isnt being used for investment purposes.

The 2 common accepted and legal workarounds
1. Sell to a trust/third party at arms length.
2. Sell to spouse (if you are in a position to do so), defining it as a sale and not a refinance.

Even though you can avoid CGT for it being a PPOR, you still get blasted for the Stamp duty.

But, does anyone know if its possible to sell to a "tenants in common" as opposed to selling to your partner? The advantage of this is you is you are exempt from stamp duty (Clause 104b NSW)

If not, can you claim a proportion? e.g. You own 5%, she owns 95% in "tenants in common", and you can claim 95%?

Ruling is here: http://www.austlii.edu.au/au/legis/nsw/consol_act/da199793/s104b.html

Supporting point is in the first line "(1) No duty is chargeable under this Chapter on a transfer, or an agreement for the sale or transfer, of residential land if:".
It specifically says that you can have a sale of the property, and only the married couple are a part of the equation in 1d.

 

[D.T.]

What are you actually trying to do? Ill put a dollar on there being a much simpler method

 

[aal04]

I want to turn my current PPOR into an IP and i want to refinance this to help with the new PPOR mortgage.

Im married, property is under my name at the moment.

 

[D.T.]

Do you mind sharing current ppor value and proposed ppor value?
And current loans on current ppor?

 

[aal04]

Current PPOR has 265k owing and is worth probably 600-650k

 

[Terry_w]

Yes, a tenant in common owner can sell to other tenant in common who can borrow to buy it and claim.

 

[aal04]

Yes, a tenant in common owner can sell to other tenant in common who can borrow to buy it and claim.

Wow thanks Terry. Saved me quite a bit if money.

 

[Paul@PFI]

104B is a one way deal...Its used to make BOTH spouses or defactos subject to the two year rule 50/50 owners. Cant be used other way around or to make it 30/70 etc...

 

[aal04]

Ive always assumed my partner owned half of everything and the way we structure ownership is for efficiency purposes only. Everything could be under my name, but when all is done and done its 50/50.

 

[Terry_w]

Ive always assumed my partner owned half of everything and the way we structure ownership is for efficiency purposes only. Everything could be under my name, but when all is done and done its 50/50.

Dangerous assumption,

 

[Nem]

I am thinking to do something very similar, IP to PPOR and PPOR to IP, would mortgage broker or tax agent or solicitor be the best person to talk to about structuring loan and titles??


Thank you

 

[Terry_w]

I am thinking to do something very similar, IP to PPOR and PPOR to IP, would mortgage broker or tax agent or solicitor be the best person to talk to about structuring loan and titles??


Thank you

Only solicitors can give legal advice (edit - this is not really correct. Tax agents can give advice in relation to tax laws, but in relation to ownership structures this is legal advice which only a solicitor can give).

 

[Nem]

Thank you Terry!!

 

[Nem]

Yes, a tenant in common owner can sell to other tenant in common who can borrow to buy it and claim.

Is full stamp duty payable on transfer??

 

[Terry_w]

Is full stamp duty payable on transfer??

Depends on the situation. Could be nil.