I want to get some advice on buying an investment property with my daughter. The property is about $500,000 and we will be using our home as security and borrowing 100% plus costs in both names. If after a couple of years the property appreciates and my daughter can handle the loan on her own can we gift her the property without her incurring stamp duty or capital gains tax?

Hi Sean,

Stamp duty is a state by state set of laws so you’d need to check with someone in NSW, but I’m sure you’ll find duty is still payable if there’s a change in the ownership arrangements.

Also, gifting your share of the property to her will be considered a disposal by you. So you will be up for CGT on your half.

Depending on your situation leaving it to her in your estate (via your will) may be a better option as CGT would only be payable when she sold it, not on transfer of ownership like you are proposing.

Regardless, you need to sit down with an accountant. There’s lots you should be doing to protect yourself & your daughter before you buy anything.

All the best.
James

Hi James,
Unfortunately you cannot avoid the stamp duty cost.
You can though have 20%-25% in your name and 75% in her name to avoid paying too much stamp duty.

The other question is: do you want to be on title with her to help with servicing? ( her income alone is not enough to service the loan)?

If she can service by herself, we can use your property as security without yourself being on title.

Hope that help.
I am happy to help.
You can reach me on 0414 545 643.
Happy Easter.

Regards

Sorry Sean, i addressed you as James. Apologies

Hi Sean,

Stamp duty will definately make this strategy expensive for you.
Capital Gains Tax will also rear its head if the value of the property goes up.

Will you be declaring any income from your share of the property?
Will you look to claim a tax deduction for outgoings (including interest on the loan)???

Best thing you can do is sit down with someone to go through all the permutations and combinations of how this can be set up to protect everyone.

what happens if you cant work any more? Does the loan go down the toilet without your income??

what happens if your daughter marries someone you are not super-keen on????

there are around a gazillion "what ifs"to consider......so get some professional advice, and if you are thinking about getting any of that negative gearing joy before if gets knocked on the head by Bill Shorten and his crew of merry men, you should get this advice pretty quick:)

good luck
bc