Purchasing real estate is usually one of the biggest financial transactions you undertake during your lifetime. Failing to ensure the transaction is structured correctly may result in significant consequences over the term of ownership. Such consequences may include, GST and Capital Gains Tax (GCT) implications, Land Tax liability, additional Stamp Duty being paid at the time of purchase and the property passing to an unintended recipient upon your death.
Each transaction should be structured to your individual circumstances and highly depend on a number of factors. A member of our Property and Conveyancing and Business Law teams can evaluate and advise you on the best structures available to you and your circumstances. Kennedy Guy also has an extensive network of Accountants who we work closely with to ensure our clients are provided the best possible advice.
For a vast number of people, property is held in their individual capacity – whether solely or jointly with another person (usually their spouse). If the property is your Principal Place of Residence (PPR – i.e. your home where you primarily live) then owning the property individually may be the best course of action.
Owning the property in this manner will allow you to take advantage of any potential Stamp Duty concessions and exemptions that may be available to you, such as the First Home Buyer exemption/concession (which may also entitle you to the First Home Owners Grant), the Pension Concession, the Principal Place of Residence Concession or even the Off-the-Plan duty concession. There are various requirements for each individual exemption/concession and a member of our team will be able to discuss this with you.
The sale of your PPR is most likely not going to attract any GST or GCT liability. Additionally, the property is also likely to be exempt from any Land Tax liability (as long as you live in the property).
If you own the property jointly with another individual (i.e. your spouse) then it is important that the property is held in the correct ‘tenancy’. You can own property as “Joint Proprietors” or “Tenants in Common”.
This is the most common type of ownership for married couples, or couples in a long-term relationship. The term joint proprietors essentially means that you own the property as a whole. If one person is to die then their share of the property will automatically pass to the surviving partner.
Tenants in Common
Tenants in common allow you to own a distinct portion of the property – whether that is a 50% share with another person/persons or some other proportion. The benefit to this method is that upon your passing your share of the property does not automatically pass to the other surviving owner, but instead can be bequeathed in accordance with your Will.
Trust Ownership & Company Ownership
A property may also be owned on Trust (with the property being held in the name of the Trustee) or through a company.
Before deciding on which structure is best for you and your individual circumstances, give a member of our team a call today to discuss the options best suited to you.
You can contact our Property & Conveyancing team on 03 9311 8511.