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Ruling
Subject: Capital gains tax
Question
Will you make a capital gain or capital loss when you transfer the property to a relative?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2013.
The scheme commenced on
1 July 2012.
Relevant facts
You obtained a home loan from a bank to fund the purchase of a house in your name for your relative and their family.
You entered into a rent to own agreement on the property with your relative.
A contract of sale between you and your relative on the property was signed.
Due to the global financial crisis, you paid out the home loan.
Your relative has now requested to pay out the remaining loan with you and to take ownership of the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 102-20
Income Tax Assessment Act 1997 - Section 104-10
Income Tax Assessment Act 1997 - Section 110-25
Income Tax Assessment Act 1997 - Section 116-20
Reasons for decision
In this case, capital gains tax (CGT) event A1 occurred upon entering into a contract of sale with your relative. Any capital gain or loss made on the property would have been made by you on this date. A CGT event will not occur upon transferring the property to your relative. Therefore no capital gain or loss will be made on the transfer of the property to your relative.