Buying a Property in My Name but Friend Is Giving Me Half of The Deposit

Mentallysick on 01/12/2020 - 15:39
Last edited 01/12/2020 - 16:00 by 1 other user

Hi all,

I am planning to buy a property but the deposit for the unit will be shared between me and my friend. He is willing to invest in property but as International Student he cannot buy it now. So, He wants to invest through me. We are planning to buy an investment unit in which he will live and pay the rent to both of us. We plan to share all the cost equally but the unit will be purchased under my name. Down the track, we plan to sell the property may be in 7-8 yrs when we make some gain on it and share the profit equally.

All cost and gain will be shared equally. I am just thinking what ramifications can it have in our life. All i can think of is I will liable for any capital gains on sale and all income/expense has to be reported only in my tax returns. I might have higher tax bill.

Do you guys think it is a good idea. I am thinking i might have to ask him to bear tax bill every year & on sale according to what extra tax I will be liable to pay.

Please spare all your thoughts on it.

Thank you

Home & Garden

Comments

  • [Deactivated] on 01/12/2020 - 15:41
    +2

    Ask an accountant.

    They way you've described it, you friend (if you honor your deal at face value) stands to make capital gains and you will be the one paying the tax.

  • PissLUR on 01/12/2020 - 15:42

    not a good idea at all for him. but if he's willing. you - go ahead.

  • whooah1979 on 01/12/2020 - 15:42
    +28

    This won't end well.

    • tomleonhart on 01/12/2020 - 15:43

      guarantee.

    • [Deactivated] on 01/12/2020 - 15:46

      This won't end well.

      Murder, suicide

      Or just murder…

    • CyberMurning on 01/12/2020 - 16:40

      100 percent agree

  • whooah1979 on 01/12/2020 - 15:43
    +1

    OP, you will be liable for all taxes and your friend will risk all their capital.

  • Earl of Lemongrab on 01/12/2020 - 15:44
    +1

    OP - From an acquisition perspective, have a read of this.
    https://firb.gov.au/residential-real-estate/established-dwel…

    Also, worth reading the penalties associated for breaches:
    https://firb.gov.au/guidance-resources/guidance-notes/gn11

    From a taxation perspective, ask an Accountant.

  • resubaehtgnolhcs on 01/12/2020 - 15:47

    Wow OP .. so many pros/cons for both yourself and your friend.

    Are you sure the two of you have considered all the possibilities, before deciding to go ahead with this venture?

  • EightImmortals on 01/12/2020 - 15:49
    +2

    What if you have a surprise hearty and die? Your friend loses everything? Maybe get a will sorted out?

  • pharkurnell on 01/12/2020 - 15:52
    +9

    How do people come up with these ideas?

    • CyberMurning on 01/12/2020 - 16:40
      +2

      desperate people have amazing ideas

    • orangetrain on 01/12/2020 - 16:40

      Friendship and booze

  • MS Paint on 01/12/2020 - 16:07
    +5

    7 years from now…..

    New forum post - My ex-friend wants half of my unit sale profits, need helps and advises.

    Also, username checks out.

    Please spare all your thoughts on it.

    Sure, spare yourself the pain and don't do it.

  • Drakesy on 01/12/2020 - 16:44

    No
    God no
    NOOOOOOOOOOOOO

  • TheWetHusky on 01/12/2020 - 16:55

    There's no protection for the investor providing the capital. Perhaps consider providing a guarantee or deposit, maybe your left testicle?

  • Trying2SaveABuck on 01/12/2020 - 17:05

    Best case scenario you make a bit of money

    Worst case scenario you end up in court, lose money and lose a friend.

    I personally wouldn't do it but if anything your friend has more to lose then you as he wont have his name on the title.

    I guess the best test if look back at photos from 7-8 years ago and if you still friends with all the people you had on the photos then maybe but if i look back 7 years ago (i was 23) i can tell you now i dont talk to 90% of the friends i had from back then

  • ShannonN on 01/12/2020 - 17:06
    +3

    How do all these supposedly poor students get the funds to buy houses and new cars all the time?

    • [Deactivated] on 01/12/2020 - 17:43
      +2

      International students are generally from wealthy families.

      These families are typically wealthy because their parents work round the clock and make clever investments.

      Buying property is a generally a good investment.

      Dots connected.

    • tallkid123 on 02/12/2020 - 09:11

      You need to keep in mind that a lot of the international students here are the exceptions, not the norm.

      A good way to reinforce this is to go to China and you'll then see everyone else.

  • Euphemistic on 01/12/2020 - 18:07

    I’d you go ahead get a legal agreement drawn up as to how it’s going to work.

    Especially note the exit strategies when your situation changes - and it will. How are you going to divide up the proceeds or determine the value of the property if only one party wants to sell etc.

    I have seen two family property purchases end earlier than expected when parties situation changed and they wanted out. The hardest thing was determining the property value without actually selling. It caused a lot of stress.

  • tallkid123 on 02/12/2020 - 09:14
    +1

    OP, your idea is terrible.

    Tax complications aside, you'd be stuck with your friend financially for the next 10 years or so. A lot can happen relationship wise in 10 years.

    Marriages.
    Kids.
    Your friend going back home for whatever reason.
    You wanting to move elsewhere.

    Way too many variables.

  • Keplaffintech on 03/12/2020 - 12:55

    if you lose money, e.g. if the market drops 30-40%, or the unit has a Mascot towers style fiasco, what's to stop him from just running away?

    Sounds like you bear all the risk but he stands to make the gains.

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