Property ownership - technical question

[daddy_4_eyes]

I'm hoping someone has the expertise to answer this question. Tax isn't my strong point.

I own a property in which i live in, and its in my name. My younger brother has a large disposable income and we have had talks about him putting his money towards my mortgage and we would become joint owners in the property*.

My dilemma is, if we do sell the property down the track and I give him his cut of the sale price, will there be any tax implications for either of us?




*There's reasons for this as opposed to him looking into other investments, but lets not go there.

 

[daddy_4_eyes]

Any takers?
Any tax accountants out there?

 

[Dodgy Barry]

No tax implications.

Make sure you get a written agreement with a lawyer casting an eye over it. Laugh all you want, now, but money is how 99% of family feuds happen.

Reading between the lines, it seems your brother may be caught up in illegal dealings. If he is, him chanelling a few $$ every month may be something that the ATO can track him with, if ever they investigated him.

 

[daddy_4_eyes]

No tax implications.

Make sure you get a written agreement with a lawyer casting an eye over it. Laugh all you want, now, but money is how 99% of family feuds happen.

Reading between the lines, it seems your brother may be caught up in illegal dealings. If he is, him chanelling a few $$ every month may be something that the ATO can track him with, if ever they investigated him.

That's a good idea. Might be worth spending $400 on a lawyer drafting up something legal rather than just a handshake agreement.

My brother isn't doing anything illegal. He does night shift at a factory, so gets good hourly pay (and does full time Uni during the day...these young people these days). Since he doesn't pay board living with his parents he earns waaaay more than he spends.

 

[EscapeHere]

If your brother isn't living there, isn't it an investment property and therefore subject to capital gains tax?

 

[daddy_4_eyes]

If your brother isn't living there, isn't it an investment property and therefore subject to capital gains tax?

That's my concern. But if that's the case, can't he claim the interest against his tax?

However, his name will neither be on the loan nor the property, so how can the ATO prove he had ownership in the property and at the same time he can't claim the tax deduction.
hmm

 

[211 CM of PAiN]

If his name isnt on the mortgage or the property, all he is really doing is lending you money which he cant claim anything for. Either way as long as you are living there it isnt an investment property so it isnt subject to capital gains tax, which also means you or he cant claim anything you spend on it and you cant claim the interest either.

 

[EscapeHere]

That's my concern. But if that's the case, can't he claim the interest against his tax?

However, his name will neither be on the loan nor the property, so how can the ATO prove he had ownership in the property and at the same time he can't claim the tax deduction.
hmm

They can't. He can give you mortgage payments as a "gift" and then when you sell it you could give him some of the sale price as a "gift".

It's not a bad way to go if you want to avoid capital gains tax but he'll miss out on the other tax benefits, so you'd want to have a pretty good price appreciation for it to work out for him.

Note: I am not an accountant, but I invest quite heavily in property. In any case it's probably paying $200 or $300 to have an accountant work out both scenarios for you.