ATO Community

capital gain tax regarding residential property

Ask a question

Initiate

Views 1322

Replies 4

I and my wife are Australian citizens but for many years living and working outside of Australia, and are therefore non-residents. My daughter has been living in Australia for many years and is a resident. Seven years ago I lent AUD 400,00 to her, free of interest, to buy a property in Melbourne at a market price of AUD 400,000 under her name. We do not have a loan agreement. Now she decides to repay the loan to us by selling the property to get the money. As we plan to come back to live in Australia soon, she can either sell her property in the market and give us the proceed, or just transfer the title of ownership to us. It happens that the price of the said property has not changed at all over the seven years and a valuation company has officially valued the property at AUD 400,000. We understand that even with no money changing hand, we would need to pay the stamp duty by the market price of AUD 400,000 for the transfer of title. The advice we need is that: If my daughter transfers the title of ownership to us under the market price of AUD 400,000, and as this would not involve any money payment (i.e., because she is paying back the loan to us, so we do noy need to pay her the market price of AUD 400,000), how will ATO treats the purchasing price of this transfer of title for the purpose of assessing the capital gain, when we at a later day, say after ten years from now, sell this property? We have in fact got contrast advices from a lawyer and an accountant: Let's say the property's value remains unchanged after ten years from now, still at AUD 400,000, the former advised that the purchasing price of our acquiring of the property from our daughter would be treated as zero since there is no actual money paid by us to my daughter, so the capital gain subject to tax liabilities is AUD 400,000 minus AUD zero, which would be a huge sum; while the accountant said that the capital gain subject to tax would be AUD 400,000 minus AUD 400,000 (which is the market price at the time when my daughter transfers the property to us), so basically the capital tax needed to pay will be zero. We will be grateful if official advice can be given regarding which views of the above is correct. Many thanks!
1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

ATO Certified

Community Support

Replies 3

Hi @jimwong,

 

Welcome to our Community!

 

There are a number of factors to consider when answering your question and we can provide general information here on our Community. To receive tailor information relating to your specific circumstances, you can write in and request a private ruling. Private rulings are free services we provide as we aim to respond within 28 days of receiving your request. You can find useful information relating to capital gains in the Guide to capital gains tax on our website.

 

Thanks.

4 REPLIES 4

Best answer

ATO Certified

Community Support

Replies 3

Hi @jimwong,

 

Welcome to our Community!

 

There are a number of factors to consider when answering your question and we can provide general information here on our Community. To receive tailor information relating to your specific circumstances, you can write in and request a private ruling. Private rulings are free services we provide as we aim to respond within 28 days of receiving your request. You can find useful information relating to capital gains in the Guide to capital gains tax on our website.

 

Thanks.

Initiate

Replies 2

Hi Dear JodieH,

Thanks a lot for your advice. To proceed as suggested, I have been trying very hard to download the following form but without success:

 

Community Support

Replies 1

Hi @jimwong,

 

Thanks for getting in touch!

 

If you are unable to use the form on the website, you can email your enquiry to TaxAdvice@ato.gov.au and they will be able to assist.

 

Thanks.

Initiate

Replies 0

Hi JodieH,

Thanks for your advice!

I have sent details of my case to the TaxAdvice@ato.gov.au today and will keep you posted about the progress.

Best regards,

Jim

Top Solution Authors