Xfer NDD to TDD

[greener]

Xfer NTDD to TDD

Background Info
My partner and I jointly owe $100k on a $500 property (NO1) which is currently our PPOR.

We have found a property (NO2) that we wish to move to and have purchased with paperwork to be finalised this week.
As the 2nd is in a rural area we expect that it will have less scope for capital appreciation that NO1.

We intend to keep NO1 as PPOR due to capital appreciation growth and intend to use the 6 year rule in case NO2 does not work as expected (lifestyle decision) and may in year 5, evaluate possibilities to knockdown NO1 and rebuild, sell or continue on as is as IP.

As a company director, I am at risk and so believe that both properties should be in my partners name for asset protection purposes. (She is in top income bracket as well)

We have a discretionary family trust structure (company as trustee) in place that currently holds shares but has no immediate income.

Questions
/1 Can I gift my half of property to my partner (Value 250k) for no financial consideration thus xfering asset to her?

/2 given /1, assume that stamp duty is due. Pls confirm.

/3 What number is stamp duty calculated on?

/4 given PPOR, assume that CGT free for next 6 years? Pls confirm.

/5 Partner can then borrow 50% of $500k in addition to her existing mortage of $50k (50% of $100k existing mortage). TDD thus moves from $100k to $300k ($250 + $50).

/6 Can partner also borrow amount for stamp duty in above loan?

/7 above to be interest only loan, assume that bank will want me to coosign loan. Pls confirm that title holder is owner of asset not signiaturies to mortgage. (asset protection reasons)

/8 Above means that $200k moved out of NTDD to TDD. Apart from the costs of the stamp duty and legals, is it really just that simple?

/9 Can IO loan be made to capitalise interest to further move NDD to TDD by freeing up cashflow to pay off NO2 faster?

I love the software, has made things easier to understand. Have pointed a number of people to our excellent website and software.

Best Regards,

 

[DaleGG]

Re: Xfer NTDD to TDD

Originally posted by greener


Questions
/1 Can I gift my half of property to my partner (Value 250k) for no financial consideration thus xfering asset to her?

Yes, you can transfer your half of the property to your spouse without her having to pay you anything.

/2 given /1, assume that stamp duty is due. Pls confirm.

In some states, Victoria being one of them, you can transfer assets between spouses under the "love and devotion" rules without paying stamp duty. Your solicitor should be able to attend to this easily.

/3 What number is stamp duty calculated on?

See above

/4 given PPOR, assume that CGT free for next 6 years? Pls confirm.

If the house remains your PPOR, there is no CGT on the sale if you sell within 6 years of it being used as an IP. At the same time, you cannot claim any other house as your PPOR and so you will trigger CGt at some point on the 2nd house should you sell that.


/5 Partner can then borrow 50% of $500k in addition to her existing mortage of $50k (50% of $100k existing mortage). TDD thus moves from $100k to $300k ($250 + $50).

At Q.1 you mentioned that your partner would acquire your half of the property without paying for it . . . otherwise yes, this is right.

/6 Can partner also borrow amount for stamp duty in above loan?

Yes, she can.

/7 above to be interest only loan, assume that bank will want me to coosign loan. Pls confirm that title holder is owner of asset not signiaturies to mortgage. (asset protection reasons)

This is correct. And, in fact, is very similar to my situation.

/8 Above means that $200k moved out of NTDD to TDD. Apart from the costs of the stamp duty and legals, is it really just that simple?

Yes, it is.

/9 Can IO loan be made to capitalise interest to further move NDD to TDD by freeing up cashflow to pay off NO2 faster?

At this stage, no I would not recommend that strategy. You might be able to soon but you would be wise to wait until a court of appeal decides on an important case.

Have fun

Dale

 

[greener]

Clarification

Thanks for the response Dale, dont have much time to pull all these opinions together to get paperwork right.
To further clarify below

/5 Partner can then borrow 50% of $500k in addition to her existing mortage of $50k (50% of $100k existing mortage). TDD thus moves from $100k to $300k ($250 + $50).

At Q.1 you mentioned that your partner would acquire your half of the property without paying for it . . . otherwise yes, this is right.

My thoughts were that I could xfer my half to partner for love and affection but then still borrow additional $250k in partners name. Am I right or have I misunderstood something?

Kind Regards,

 

[DaleGG]

Hi

No, you are right. It will mean a complete refinance though.

Dale