Change of ownership of assets after a relationship breakdown
Daniel Dalli highlights a number of important factors, including tax and duty obligations, that may arise out of transferring property between spouses following a separation
When an asset changes ownership, capital gains tax and stamp duty may be applicable. Stamp duty is otherwise defined as a tax which is payable on certain purchases such as buying a house, land or investment property. Capital gains tax is a tax payable on the sale of assets and applies to real estate (property), shares and personal assets that were acquired for $10,000 or more.
The change of ownership of assets is a relevant process when dealing with a property settlement arising as a result of a relationship breakdown (either marriage of defacto relationship). Capital gains tax exemptions through family law are applicable to relationship breakdowns which mean that separated parties can avoid or minimise the tax implications of transferring property. Often experienced legal representation is required with the assistance of financial advisors or accountants to ensure the most effective path is taken.
Often as a result of the property settlement, it is the family home needs to be transferred between the parties. In circumstances when both parties to a relationship are the registered owners, and one party wishes to retain the family home, one party must transfer their interest in the property to the other. So long as the transfer is effected by a Family Court order or a formal agreement, known as a Binding Financial Agreement, the parties may be exempt from stamp duty or receive a ‘rollover’ of capital gains tax.