Sell or Restructure Two Investment Properties in Melbourne?

Lsonih on 09/09/2021 - 18:13
Last edited 09/09/2021 - 18:31 by 1 other user

Hi there.

Curious to know about whether people ever transfer a property from their own name to a structure, for asset protection. Is this is even doable / or raises ATO flags?

I have two investment properties that is draining funds, both in Melbourne. I am constantly having to put money in,
and the rent that's coming in is reducing.

I see two options at present, but wondering what else there is:

1) To sell property to someone, just to get rid of it. There is a bit to outlay (20K? per owner+) to the new owner, due to Body Corp. repairs. Due to period of non-lettability, deductions during that time alters any CGT (?) it has had water entry history, which would be declared in the strata info, and I think it'll be hard to sell

2) Sell to myself in a different structure, but don't see this as being worthwhile as stamp duty will have to be paid,
However it might be a way to offset some of the losses, and buy it back for a reduced value? Given the market is not great, is there a way to capitalise on that

I would like to free up funds, but don't think I'll get much right now, don't think I'll come out on top, but just trying to get another outlook or opinion

Thank you!

• 

  Ocker on 09/09/2021 - 18:22

  Are you married, as that will alter my answer

  • 

    sonih on 09/09/2021 - 18:24

    single

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  netjock on 09/09/2021 - 18:23

  Both have a water ingress problem?

  Any transactions will create cap gains or loss plus transaction charges.

  • 

    sonih on 09/09/2021 - 18:27

    both have.
    one needs extensive works regarding defective building works, combustible cladding, awning etc.
    how does it work if you have deductions that you haven't been able to claim, as the 'asset' wasn't earning an income at the time, against capital gains

    • 

      netjock on 09/09/2021 - 21:08

      If you can't offset against income it would form a capital loss.

      It is unfortunate both have defects. Same building?

      Good luck on that front.

      Personally also have 2 apartments but luckily never had these problems.

    • 

      deme on 09/09/2021 - 22:15

      You can only have a single PPOR that is exempt from CGT.

      Asset earning income or lack of deductions won't matter with respect to CGT.

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  elgrande on 09/09/2021 - 18:25

  +2

  Are you vaccinated, as that will alter my answer

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  Bafranz on 09/09/2021 - 18:25

  +1

  Pass the problem to someone else, sell sell sell

  • 

    sonih on 09/09/2021 - 18:32

    cheers
    the locations are great but both being apartments
    never buying an apartment again

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  Ocker on 09/09/2021 - 18:27

  +1

  Damn! If you were married then you could sell the property to your wife (no stamp duty payable) and have your wife borrow the funds to purchase the property from you. In doing so likely end up with a negatively geared investment

  • 

    sonih on 09/09/2021 - 18:29

    interesting, didn't know you could do that, to waive stamp duty if u sell to a spouse

    • 

      Almost Banned on 09/09/2021 - 18:32

      +2

      It would have to be a lot of transfer duty to make marriage worthwhile!

    • 

      kanad on 10/09/2021 - 07:48

      In Victoria with conditions, one of them is that only for ppor and not investment properties.

      https://sro.vic.gov.au/spouse-and-partner-exemption

  • 

    deme on 09/09/2021 - 22:11

    This will incur a CGT event though

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  Indomietable on 09/09/2021 - 20:55

  +1

  Most CBD apartments are liability. If someone give me free apartment with no mortgage, I will sell it the next day.

  I'd say cut your losses, learn from your mistakes and move on.

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  deme on 09/09/2021 - 22:13

  It seems you lack knowledge in taxation law and are in a precarious financial position.
  It would be worthwhile to see professional advice on this.

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  GourmetFoodie on 11/09/2021 - 08:26

  If they are lemons no tax structure is ever going to make them worth it. I’d sell and take the loss ro free up cash to invest in something worthwhile.

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  bemybubble on 11/09/2021 - 11:28

  I’ve
  Only once transferred a property from an individual name to a trust. Only reason was that after doing the sums it made commercial sense as it was a development site. Copped the stamp duty and cap gain and was perfectly fine with it.

  In all honesty your best to let laying dogs lie