Tax Q&A: Ownership of investment property

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I don’t work and my husband is the sole income earner. We’re purchasing an investment property and would like to know who should own the property. To minimise tax, shall we put his name in the title and both our names on the mortgage?

There is a section in the tax legislation that allows both spouses to co-guarantee the mortgage and also have the mortgage in both your names while the title/ownership of the investment property is in only one of the spouses’ names.

Therefore, in your case, it is OK to purchase the property in your husband’s name and have the mortgage secured in both names.

However, from an ATO compliance point of view, you must ensure that all assessable income such as rent that is derived from the property must be assessed only in your husband’s name (through his income tax return), and all associated outgoings such as interest on the loan, council rates, land tax, water rates, depreciation, repairs, maintenance, agent’s fees, borrowing costs, etc) must also be claimed as income tax deductions only in your husband’s name.

This is because your husband will have full ownership of the property.

– Angelo Panagopoulos

I am an investor in Hong Kong. Recently, there have been a lot of property fairs in Hong Kong regarding property developments to be built in Australia. I would like to know if I pay a down payment for a future property development in Australia, particularly in Melbourne, am I allowed to sell the property before the full payment? This kind of sale is both legal and common in Hong Kong. Investors often make a profit through this type of sale. Is that the case in Australia? What are the required procedures for the foreign investor?

For tax purposes, investors classified as ‘non-residents of Australia’ are taxed only on income sourced in Australia.

Where a property located in Australia is acquired ‘off the plan’ (before construction is complete), it can be resold at any time after that date, regardless of whether construction has been completed or not.

Any profit generated is subject to the non-resident rates of tax, starting at 32.5%.

Net capital gain is calculated as the difference between the sale price and the ‘cost base’.

The cost base includes the purchase price, stamp duty (state tax on purchase value), legal fees on purchase, buyer’s advocate fees to source the property, legal fees on sale, and agent’s commission on sale. Where no income is generated, interest expenses will also be part of the cost base.

– Shukri Barbara

The tax experts

Shukri Barbara is a CPA, CTA and principal advisor at Property Tax Specialists, with over 30 years’ experience in public practice, specialising in property tax, ownership structures, asset protection, (legally) minimising tax, and cash flow analysis

Angelo Panagopoulos is principal at Hamilton Reid Chartered Accountants, specialising in property and taxation, asset protection and ownership structures.

The views provided are of a general nature only and should be considered as general education. Readers should not act on the information above without obtaining professional advice relevant to their circumstances. The article is intended as information only.

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