Purchasing property can be both an exciting and daunting experience. Exciting because on the one hand you have found the property you have been searching for and you start dreaming of what you will do to transform the house into your home. In what can seem like the daunting side to your property purchase is the point at which you first lay eyes on the contract for sale of land. The contract requires you to make some important decisions. When you purchase property with your spouse or partner, you must decide how you will buy the property together. You can purchase either as joint tenants or as tenants in common. The distinction between the two is an important one because it can have an impact on future life events for example a relationship breakdown or death.
If you purchase property as joint tenants, this means that upon your death, your interest in the property automatically passes to your spouse/partner. This is despite any provision in your will to the contrary. This is because your interest in the property does not form part of your estate and it is not available for distribution to the beneficiaries of your will. Many married couples own property as joint tenants. Also a joint tenancy may exist where property is held in trust.
By contrast, if you purchase as tenants in common, then your individual share in the property can be gifted in your will. Furthermore the respective shares in the property may be held equally (e.g. 50/50) or in some other proportion (e.g. 60/40, 75/25 or 80/20 etc). Sometimes couples may choose to own property as tenants in common if for example there are children from a previous marriage for whom they wish to make provision upon their death. Also investors often buy property together as tenants in common.
If property is owned as joint tenants there is a process by which that property holding can be unilaterally severed by one party. The other party is given notice of this before it occurs. There are circumstances where this can be an appropriate course of action.
Being aware of your options can assist you in making a more informed choice when it comes to buying your next property. At Everingham Solomons we have the experience to assist you with all your property needs because Helping You is Our Business.
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In a recent full Federal Court decision, a New South Wales property developer purchased a single story house, intending to develop it into units for use other than for residential accommodation. At the time of settlement the home was occupied by a tenant. The developer adopted the view that the sale was a taxable supply because it was his intention to develop the land into commercial units and consequently claimed a tax credit from the ATO.
The ATO took a different view.
The GST legislation provides that the supply of property is not subject to GST if the premises are to be used predominantly for residential accommodation. The issue was whether the property was to be used predominantly for residential accommodation.
The developer contended that the question as to whether the premises were to be used predominantly for residential accommodation is to be determined by reference to the subjective intentions of the developer. The developer asserted that it intended to develop the property at the end of the tenancy period for uses which were not predominantly for residential accommodation.
The full Federal Court dismissed the developer’s submissions and determined that the test as to whether residential premises are to be used predominantly for residential accommodation should be determined objectively by reference to the physical characteristics of the property as at the date of acquisition and that the intentions of the future owner are irrelevant.
The implications of GST must be considered in every property transaction. It is still an area which is fraught with uncertainty.
At Everingham Solomons we have the expertise to assist you with all of your property and development matters because Helping You is Our Business.
Purchasing property can be both an exciting and daunting experience. Exciting because on the one hand you have found the property you have been searching for and you start dreaming of what you will do to transform the house into your home. In what can seem like the daunting side to your property purchase is the point at which you first lay eyes on the contract for sale of land. The contract requires you to make some important decisions. When you purchase property with your spouse or partner, you must decide how you will buy the property together. You can purchase either as joint tenants or as tenants in common. The distinction between the two is an important one because it can have an impact on future life events for example a relationship breakdown or death.
