Change of Title
A change of title can be defined in property terms as a change in a property’s ownership structure. The ownership structure of a property describes the way a property is owned – for example, if it’s a shared property, the property could be in the name of the highest income earner to maximise gearing benefits. Or, ownership could be shared between low and high income earners to spread the income tax liabilities and capital gain.
Knowing the different types of owner structure is extremely important. You may want the benefit of tax savings, have a relationship breakdown, or wish to start a property business. Read below for valuable insight into how a transfer of property, and as such, how a change of title could affect your property’s ownership structure.
Types of Ownership Structure
This refers to owning the property equally with someone else. One joint tenant cannot pass their share onto another person – and even in the case of death, their share passes on to the other tenant.
Tenants In Common
Indicates a specified proportion of ownership rights in real property and if one of these tenants is to pass away, that share is transferred to the estate of the deceased, and not just divided up equally.
In this instance, the property is managed and owned by a trust – most commonly, a family trust. This is the most useful type of structure if you are deciding to leave your property to your children.
One name is on the title deed, making that one person the sole owner and therefore wholly responsible for the property.
This refers to owning a property through a company. In this instance, it is best to speak to a financial advisor about capital gains tax to ascertain what your situation may involve.
Reasons to Transfer Your Property Title
As real estate is a key area of investment in Australia, there are multiple facets of tax to be considered. This includes tax benefits, future tax liabilities, asset protection, estate planning and much more. Reasons for initial investment may often change as time goes by, and as such, these tax benefits or liabilities may progress past the ownership of the property.
Passing the Property on to a Family Member
- Parents may opt to gift property to their children instead of selling, or alternatively, children may commit to staying within the family home once their parents decide to relocate, downsize or move into an aged care facility.
- Transferring a property to a company or trust for tax benefits.
- A relationship breakdown or divorce may result in the property being transferred to a different name.
Costs of Changing Ownership
Capital Gains Tax
The seller will need to pay Capital Gains Tax if a sale involves an investment property – but, the percentage amount you will pay on capital gains tax differs from situation to situation.
Stamp Duty is generally between 3 and 4% of a property’s value but depends on the location of the property. Changing the ownership of a property will most likely incur stamp duty.
If you’re seeking advice on a change in title on your property in Western Australia, look no further than C&R Settlements . With over 60 years of combined experience, C&R Settlements are a team of passionate and dedicated Perth settlement agents and conveyancers – and are sure to assist your journey in changing ownership structure. Call us today on (08) 6424 9788 to enquire.