How to change the ownership % on a house

Hi All,

I had a house when I met OH and we now use it as an IP. This house is currently 100% in my name on the title. How hard is it to change it to be mostly in his name (due to tax reasons thinking 90% OH and me 10%) and how do I go about it?

We have recently re-financed this house to get the equity to purchase IP #2 and his name is now on the loan, however the bank couldn't advise me on updating the title etc.

Thanks

 

You need to see a lawyer and get tax advice and general legal advice as well as convey the title. Many legal issues such as stamp duty (possibly exempt), asset protection and estate planning.

If you do this correctly your will be able to increase tax deductions and use borrowed funds to pay down private loans (and have the interest deductible).

If you do it incorrectly you will spend money and not be any better off financially.

 

Although there are (tax-deductible) expenses, you might consider setting up a discretionary trust, with yourself as the sole appointor and director, and gifting/settling the house in the trust. With the appropriate named beneficiaries, you would have the flexibility to distribute as much of the income as you wished to OH, without yielding control/ownership of the house. I think changing ownership into his name long-term for the sake of short-term tax considerations is such a bad idea, no matter how much you love/trust him.

 

just to give you an idea of the legal side of things (and this is for NSW, I have not done things like this in other states), you will need to whats called a transfer:

you will be signing as transferor and both you and your partner will be signing as transferee as tenants in common (in shares 90/10).

when you lodge this, you would normally require a valuation of the property and your partner would be liable for stamp duty on his share of the value of the property.

the other hurdle is to co-ordinate this with your bank, since they would be in possession of the title.

this is generally how it goes in NSW, but I would talk to someone that deals with this kind of thing.

as for the tax side of things... I have no idea

 

Red Ruby,
In general terms there is no stamp duty payable on transfer between spouses in Victoria. However ownership does not necessarily govern the tax deductibility, it is the use of the funds that is critical.

If you have refinanced the IP, used those new funds to settle the purchase of another IP, then it will be the ownership of the new IP that is critical, not the ownership of the original IP. I presume the new IP is in the OH name.

While the ability to transfer names is relatively simple from the State Revenue Office (SRO) in Victoria (a good conveyancer could do this for you) you will need consent from the lender. If you are both on the mortgage of your first IP, then this should not be an issue, just time. Make sure it is worth the hassle, talk to a good tax accountant who knows what they are doing (many do not). There will likely be CGT considerations for you if you relinquish some of the ownership unless you are still in a period of 6 years and no new residence.

As to setting up a trust and transferring, you will incur stamp duty again and if it is still negatively geared, the tax losses will remain in the trust. I would be reluctant to do things like this for short term tax benefits, the time to do them has most likely passed by.

Good luck with it and let us know what you end up doing.
Greg