Browse Forums Home Finance 1 Jan 02, 2010 9:43 am Hi all, i currently own a house in canberra with my brother. He is getting married and therefore in approx. 6 months he is looking at moving out. What i want to do is buy the house off him. So what we have to do is get a valuation done, and then i would have to take his name off the loan and extend the loan so i can pay him out his share (we have maybe $50,000 in equity, so i would owe him $25,000). At first i was looking at doing this, but it just seems like a bad option, i would have to pay stamp duty yet again (even though i already own the house) and im sure there are other costs. Does anyone know of tax implications if we were to say, keep my brother on the loan, and therefore he owns two houses? While his name is still on it ultimately he would have nothing to do with it, So i would be completely paying it off, however because he is on the mortgage for both houses i believe there are taxes he has to pay. Has anyone been in a similar situation or know where we stand with this? thanks Re: Owning two homes - tax 2Jan 02, 2010 10:01 am Hi Gazza Welcome to the forum! I can give you a few thoughts as I understand it (I'm by no means an expert), however I think you really need to speak with an accountant/professional...... gazza23 So what we have to do is get a valuation done, and then i would have to take his name off the loan and extend the loan so i can pay him out his share (we have maybe $50,000 in equity, so i would owe him $25,000) I would have thought he would want 50% of the valuation amount, not the equity amount? gazza23 At first i was looking at doing this, but it just seems like a bad option, i would have to pay stamp duty yet again (even though i already own the house) and im sure there are other costs. There would be costs involved with the bank who you hold the mortgage with, office of state revenue to discharge and re-establish the mortgage and stamp duty as you mentioned gazza23 Does anyone know of tax implications if we were to say, keep my brother on the loan, and therefore he owns two houses? I'm not sure about the tax side of things, but this will substantially effect his ability to borrow money for his own home. The Bank in calculating his borrowing capacity will take into account all debts, including this one, regardless of his "involvement". He is a loan party, therefore can be called upon to repay the debt at anytime. gazza23 While his name is still on it ultimately he would have nothing to do with it, So i would be completely paying it off..... Sorry to be a bearer of bad news, but what about the scenario if you pass away. Your brothers name is on the house, so depending on your estate planning, has full rights to the title of the home. What if things go bad between you and your brother? Hopefully I've given you a few things to think about, and others maybe better informed than me.....but I still think you need professional advice. Cheers Bel Still not in. Don't ask!? Re: Owning two homes - tax 3Jan 02, 2010 10:06 am I have a friend who her and her husband went halves with her sister and the sister bought the property off my friend and her husband. Bel you would only be paying him out on his share of the equity as if you were selling the property to an outside buyer both owners would go 50/50 in any profit. I will try speak to my friend and get some more details it was a little while ago now. I agree with Bel on the keeping his name on the loan if he isn't paying anything it could end badly. Re: Owning two homes - tax 4Jan 02, 2010 1:05 pm Bel, as said, If the house is valued at $60,000 more than what we owe, if we were to both sell we would both get $30,000. Therefore considering i am keeping the house, my loan would need to be extended $30,000 to give to my brother. However you made a good point about the ability to borrow for his own home - i had not thought of that. In terms of things going bad with him, i dont see it happening but i know it is something to be taken into consideration. Thanks all for your help. I am waiting to fill in some forms to see if i can afford it myself (which i believe i can, whether or not the bank thinks i can is a different story, hence my initial question). the exemption applies only to your principal place of residence - so you must live in it. The 200 days is continuous. You also have to apply for the exemption. 2 13316 If it's your primary residence then there is no tax deductions to be made. 4 125275 Hi, We're building a double-storey in Perth and I'm undecided with the kitchen sink situation. I'm set on having the main sink with dishwasher in the scullery - and… 0 20912 |