Edited version of private ruling

Authorisation Number: 1011618657472

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Ruling

Subject: Property equitable interest

Are you entitled to 100% of income and deductions for your property?

Yes.

Relevant facts

You purchased your spouse's share of the former family home with the intention of having it as an investment in your own name.

The purchase was refinanced with a bank, via a finance broker.

You paid the fees to transfer ownership to your name to a solicitor, valuer and the State government.

You have lodged tax returns since then as if the transfer of title had occurred.

You sold the property two years later and then discovered that both you and your spouse were still listed as the owners.

You raised the matter with the bank at the time, and were told verbally that it was not a matter to do with the bank.

Your tax returns for the years you considered the property transferred to your name were prepared by a tax agent.

You were suffering from a medical condition for some time after the sale of the property and did not follow up the enquiry at that time.

Your newly appointed tax agent told you that you would have to resubmit tax returns for past years, as the transfer of title had not occurred.

You initiated enquiries with the finance broker and your solicitor.

Following information received from them, you again enquired with the bank on several occasions.

You received a letter from the bank stating that the bank had not provided the stamped transfer document to the Land Titles Office for registration in the year you had paid for the title to be transferred.

The letter you received from the bank confirmed that the Transfer requested that the property in question be transferred in ownership from your wife's name to yours.

Reasons for decision

We accept that you held 100% equitable interest in the property. Therefore, you are entitled to 100% of the rental income and 100% of the expenses for the property.

Detailed reasoning

Ownership interest in rental property

Taxation Ruling TR 93/32 states that generally a legal interest in property is achieved by the owner being the registered proprietor of the legal title to the land.

According to TR 93/32, the income/loss from a rental property must be shared according to the legal interest of the owners except in those very limited circumstances where there is sufficient evidence to establish that the equitable interest is different from the legal title.

You and your spouse owned your former family home. This means that you each held an equal legal interest.

Equitable interest

In your situation, you have taken all steps to effect the transfer of the title of the portion of your spouse's title of the property to your name so that you alone were the legal owner.

In order to settle the previous mortgage in both names, you took out a new mortgage in your name only.

You paid the stamp duty due for the change of title of the property.

You relied on the bank to lodge the stamped transfer document for registration with the Titles Office.

You have documentation from the bank acknowledging that they failed to lodge the transfer document for registration, which effectively meant that the property title did not pass to your name.

There is sufficient evidence in your case to establish that your equitable interest in the property is different from your legal interest.

We accept that your equitable interest in the property is 100%.