Archives: Investax FAQs

Secure Your Legacy: Protect Assets for Exclusive Family Benefit

Establishing a Testamentary Trust allows you to dictate the distribution of your assets, ensuring that only your chosen beneficiaries, such as your children and family, receive the inheritance as per your wishes.

• A Testamentary Trust is a legal arrangement activated upon the death of a Will-maker. It allows assets, including properties, to be distributed to a trustee, who manages and distributes them to beneficiaries according to the terms specified in the Will.

Home Sale Move: Capital Gains Tax Liability After 6 Months?

If you get a new home before selling your old one, you can actually treat both as your main residence or principal place of residence (PPOR) up to 6 months. 

 

This applies under the following conditions:

 

1. The old property must have been your main residence continuously for at least 3 months within the 12-month period prior to its sale.
2. During any period in those 12 months when the old property was not your primary residence, it must not have been used to generate income (so property cannot be rented).
3. The new property must become your primary residence.

 

This way, you can take your time moving without worrying about the capital gain tax. 

 

Source – Moving to a new main residence  

Incur Stamp Duty: Transferring 100% Property to Partner

Transfers between family members are liable to transfer duty, however some transfers may qualify for an exemption or concession. No transfer/stamp duty is payable where a transfer of residential land is between a married couple, or de facto partners and the property being transferred is either:

• the family home (principal place of residence)
• vacant land, which is intended to be used as the site of the family home.

Following the transfer, the property must be jointly owned, with each partner holding an equal 50% share. It’s important to note that a complete transfer of ownership, where 100% of the property is transferred, will incur stamp duty charges.

De facto couples must be living together for at least two years before applying for this exemption.

Transferring 50% Property: Navigate Capital Gian Tax Impact

When you sell, transfer, or gift a portion of your investment property to your spouse or partner, you are subject to capital gains tax. However, an exception exists: if the transfer involves your Principal Place of Residence (PPOR), you are exempt from capital gains tax obligations.

Stamp Duty Impact: Transferring 50% Property to Partner

Transfers between family members are liable to transfer duty, however some transfers may qualify for an exemption or concession. No transfer/stamp duty is payable where a transfer of residential land is between a married couple, or de facto partners and the property being transferred is either:

 

• the family home (principal place of residence)
• vacant land, which is intended to be used as the site of the family home.

 

As a result of the transfer, the property must be held equally (50-50) by both partners.

De facto couples must be living together for at least two years before applying for this exemption.

 

Source – Revenue NSW 

Refinancing:

Refinancing is the process of replacing an existing loan with a new one, typically to secure better terms or lower interest rates. You should consider refinancing when interest rates drop significantly, as it can potentially reduce your monthly payments, save money on interest over the life of the loan, or shorten the loan term to pay off debt faster. Additionally, refinancing may make sense if your credit score has improved since you originally obtained the loan, as this can lead to more favourable terms. However, it’s essential to weigh the costs associated with refinancing, including application fees, and closing costs, against the potential benefits to determine if it’s a financially sound decision.

To increase your likelihood of loan approval:

• Maintain a good credit score by making timely payments.
• Reduce existing debt and manage credit responsibly.
• Save for a down payment or collateral, if required.
• Provide accurate and complete financial documentation.
• Shop around for lenders and loan options.
• Consider a co-signer if your credit is weak.
• Address any discrepancies or issues on your credit report.
• Demonstrate a stable income and employment history.

Credit score:

A credit score is a numerical representation of your creditworthiness. It’s calculated based on your credit history, including factors like your payment history, credit utilisation, length of credit history, and more. Lenders use your credit score to assess the risk of lending to you. A higher credit score typically means better loan terms and lower interest rates, while a lower score might result in less favourable terms or loan denials. It’s crucial to monitor and maintain a good credit score to access affordable loans and financial opportunities.