Hi Guys, could you please help with the following. My ex husband got injury at work and was receiving workers comp for 1.5 years. Now the insurer reduced his payments to $280 per week. He still can't work and his doctors are saying this condition is permanent. They are going to fight this in court but for now he is on minimum survivable payments. His mother wants to gift my ex one of her investment properties so he could pay off half of his mortgage. She knows she will have to pay CGT. He on the other hand will have to pay stamp duty and CGT when selling the apartment to pay off his portion of the mortgage. ATO, I guess, will consider the whole amount of the sale as his income. So he will have to pay tax of $350K which will be the sale price. Is my understanding is correct? How can he avoid loosing so much money? He already going through severe depression and anxiety becoming disabled at 50 years of age. And now he will have to half the help he will be getting. It doesn't seem to be fair. Could you please advise if my understanding is correct? Not the fairness but the tax part of coarse ! Thank you!
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Hi @antonovskan,
I may need a bit more info to make sure I’m giving you the right guidance.
I just wanted to let you know that questions about stamp duty are handled by your state or territory revenue office, not the ATO, so you’ll need to contact them directly about any stamp duty implications.
To better understand the scenario, can you confirm whether the property is being:
- Sold by your ex‑husband’s mother, and the sale proceeds will then be gifted to your ex‑husband? Or,
- Gifted to your ex-husband, and they plan on selling it?
Either way, we do have a really handy article about tax on gifts and inheritances that I think can help answer your question/s.
Thank you, Kara! The property haven't changed hands yet. My ex is just seeking advice on what would benefit him more. His mother wants to help either selling and giving him money or gifting him the property so he can then sell pretty much immediately .
Hi @antonovskan,
While we can’t say which option would be better for him, reading through that article is a good place to start.
If your ex‑husband’s mother gifts the property to him, this is treated as if she has disposed of the property at market value for capital gains tax (CGT) purposes.
She needs to work out any CGT using the market value at the time of transfer, even though no money is paid. If the property was her main residence, and all conditions are met, she may be able to reduce or disregard the CGT under the main residence exemption.
Your ex‑husband doesn’t pay CGT when he receives the property. For CGT purposes, the market value at the time of transfer becomes his cost base.
If he later sells the property, CGT may apply only to any capital gain, not the full sale price. He can only claim a main residence exemption for periods after the transfer when the property is his main residence. The 50% CGT discount is a separate rule and generally only applies if he’s owned the property for 12 months or more before selling.
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