Nominations and Share Transfer
25 March 2021
By Ross Barnett - Property Accountant
Following the government announcements - urgent action maybe required if you are;
- Restructure (in last email and see below)
- New property purchase and plan to nominate (for example to LTC)
- Share Transfers
This information is for residential long term hold rentals only, and not for commercial or trading properties. We do not have any capacity to answer questions on these topics for non clients, so please do not be offended if we respond that we can't, or that we don't respond until next week (this week is a complete nightmare for me with the changes)
Video with examples of changes over 10 years https://youtu.be/mnxGyDi0EJE">Click here to watch
If you have signed a sale and purchase agreement to buy a property in one entity (for example) your personal name, but you plan to set up a Trust or LTC and nominate this entity to be the purchaser. The new entity will settle on the property 27/3 or after.
IMPORTANT that the nomination is completed 26/3/21 or earlier.
For example, I sign a sale and purchase on 1/3/21 under my personal name, Ross Barnett and /or nominee.
Settlement is not until 25/5/21 and I plan to nominate a new LTC, Great Property Ltd.
1) If nomination done on 26/3/21 or before, then 5 year brightline and existing property interest deductions apply (still slowly phased out over 4 years)
2) If nomination done on 27/3/21 or after, then 10 year brightline and no interest deductions from 1/10/21
Always get me to check any share transfers before you do them. There are a lot of catches and a share transfer can have serious tax implications
If you were planning a share transfer, and are an existing client of Coombe Smith, please flick me a quick email, so that we can double check if this needs to be done on 26/3/21 or before. firstname.lastname@example.org
Otherwise if dated 27/3/21 or after, then properties owned by LTC could be subject to new 10 year brightline!!
Restructure - repeat of email a day or two ago
If you have have been talking to me about a restructure, and have one coming up around 1/4/21 (normal date used to align with financial year), then please send me a quick email so that I can ensure we can review your case. Even if we were thinking about doing the restructure later, it will be worth sending me a quick email to ensure your not missed somehow.
If this is you, I will be trying to ring you today or tomorrow as we might need to make changes very quickly.
What is a restructure? Normally it is selling a current personal house to a new entity, or transferring a property into a new entity. This is often done to improve interest deductions, so is effected by the new rules.
Everyone else - DON'T PANIC
The new changes will have an effect but are unlikely to be a reason to sell good investment properties. We will be in touch in the next couple of days with an update. Make sure you read my last blog with an example of how the change might work.
gsc="">Click here to book a free chat with me (Ross)