Duplex title change - Minimise CGT/Stamp duty?

ChatCPT on 21/08/2015 - 11:13

Hello good friends. I like the financial talk that goes on here and now have some legal/accounting matters that I have been pondering.
Could I get your opinion to prepare myself before I go to the professionals for advice.

TLDR: Summary – retiring parents own house, we want to build duplex and have one unit owned by each of two children.
What is best way to do this minimising CGT + stamp duty?

Details

NSW House bought 500k ages ago by parents
Worth 1.3M today – main residence
2 Kids with no properties.

~Option A~
Parents leave house in their name
Parents build duplex costing 1M – duplex now worth 2.6M
Subdivide and register under each child = 130K stamp duty + CGT on 300K gain
CGT 300K gain = (2.6M less 1M build cost less Market val just prior to build 1.3M)
Option A Costs = 130K + ~75K = 205K

~Option B~
Parents co-register land under both kids = stamp duty 60K, no CGT
Kids co-build duplex costing 1M
Kids subdivide and register title so each own a unit each = do we pay stamp duty here?

We don’t want both kids to own half of each unit – can you please advise the best way so each kid holds a unit each individually.
Looks like option A is definitely more expensive. Any thoughts on how to do this most efficiently would be much appreciated.

Home & Garden

Comments

  • Peck on 21/08/2015 - 12:07
    +2

    Firstly I am no expert. But have you thought about/looked into the possiblity of giving the children the house into their names 'as it is' and they pay the stamp duty and register title as Tenants in Common. They then take up residence and then value add the property by conversion to duplex and then they could do the legal transaction to separate titles and therefore possibly no CGT ??

    • ChatCPT on 21/08/2015 - 13:16

      yeh that's option B

  • Geewhizz on 21/08/2015 - 12:26
    +1

    If Centrelink is involved, you would need to look into the implications of gifting it either way.

  • isthisreally_me on 21/08/2015 - 13:59
    -1

    Go see an accountant

    • Peck on 21/08/2015 - 14:41

      Yep I agree, but he did say that this was in preparation for getting professional advice.

  • ChatCPT on 21/08/2015 - 15:22
    +1

    OK so I spoke to the council/LPI/stamp duty offices today.

    For the benefit of those that may be in a similar situation, this seems the best way -

    1. Before building anything, change title to both kids names - pay stamp duty 60K
    2. Kids apply for building contract and take loan + build duplex
    3. Subdivide with LPI
    4. Pay $50 to have the title split so each kid has a separate duplex (must be equal value)

    Thanks for your help

    • Peck on 21/08/2015 - 15:33
      +3

      Well done. Do I get a gold star?

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