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Pellen(Initiate)Initiate
12 Apr 2024

my daughter in law owns the original house and an investment property. When they seperated 5 years ago he moved into the investment property and paid rent but they agreed that if he raised an amount equal to what she paid for the property (by a gift from me) she would transfer the investment property to him.

The separation was amicable and my son made no claim on her assets.

I am now prepared to make that gift by a disposal of some of my assets and will have to pay CGT.

What are the CGT implications for them on the properties.







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Taxduck(Taxicorn)Taxicorn
13 Apr 2024

It appears that any CGT rollover on marriage breakdown won't apply. ("private or informal agreement") See link on this.

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/relationship-breakdown-and-capital-gains-tax/when-the-relationship-breakdown-rollover-applies

Your son has no CGT implications because he hasn't sold or transferred any property. Daughter in law in transferring property will have. Her sale price for CGT calculation will be market value of investment property on date of transfer.

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Most helpful reply

Taxduck(Taxicorn)Taxicorn
13 Apr 2024

It appears that any CGT rollover on marriage breakdown won't apply. ("private or informal agreement") See link on this.

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/relationship-breakdown-and-capital-gains-tax/when-the-relationship-breakdown-rollover-applies

Your son has no CGT implications because he hasn't sold or transferred any property. Daughter in law in transferring property will have. Her sale price for CGT calculation will be market value of investment property on date of transfer.

Pellen(Initiate)Initiate
13 Apr 2024

What about event B 1.

Does this not apply?

Taxduck(Taxicorn)Taxicorn
13 Apr 2024

"The rollover does not apply if you and your spouse divide assets under a private or informal agreement."

As taken from the link. CGT event B1 only applies if there is a rollover.

Pellen(Initiate)Initiate
13 Apr 2024

@Pellenato

I would like to make a comment about divorce.

It is sad that when a couple separate amicably they are punished as in this example.

To be forced to go to court incurring considerable costs can result in recriminations setting in and ruining the future relationship.

My son was not actually married but they lived together for more than 20 years and have 2 children who share their time with their

parents.

To see their continuing good relationship is probably worth the considerable amount of CGT which will be incurred.


Taxduck(Taxicorn)Taxicorn
14 Apr 2024

@Pellenato

If the rollover does not apply (if no binding agreement as explained in the link) then your son has no CGT event to concern himself with. (if it remains his main residence until sold). If he had received the property under a binding agreement then he would have been saddled with CGT if he later sold. (as it had been an investment property). So with or without the agreement the property would be subject to CGT.

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