Financial settlement and capital gains tax

[Ect21]

I am trying to mediate a financial settlement with my husband. We have come to an agreement that I will get 55% of the asset pool. However he will end up with out investment properties and he is claiming that I am liable to pay him for for possible future capital gains tax should he sell them in the future. Is this the case. He is wanting to keep them and pay me out for them so shouldn't that be his expense should be choose to sell them?

 

[CSFLW]

Before you enter into a financial agreement, make sure that you understand how the investment properties are held (title).

The usual arrangement is that the party retaining the properties indemnifies the other for any future tax liabilities whatsoever.

 

[Ect21]

Before you enter into a financial agreement, make sure that you understand how the investment properties are held (title).

The usual arrangement is that the party retaining the properties indemnifies the other for any future tax liabilities whatsoever.

Thankyou. He is trying to tell me that I am liable for 'possible' future capital gains tax even though I know he has no interest in selling anything. There are 10 properties so as you can imagine that is alot of capital gains tax he is trying to put down as a liability.

 

[CSFLW]

Make sure you get proper advice.

We are happy to help [email protected]

 

[SRL1]

If you go strictly by the legal principles you don't have to pay him for any of his capital gains tax liabilities, unless there is a firm intention to sell the properties in the near future.

However, if he is paying or compensating you for your share of those properties at current market value (as opposed to the original purchase price), then it's only fair that you compensate him for your share of the estimated tax on capital gains the two of you have made up to now. You can get an accountant to work out this amount based on the current valuation of the properties. The tax on any gains made after the settlement should be solely his responsibility.

 

[Beeeeeeebee]

latent CGT can and should be applied to any properties.
So if anyone in a settlement gets a property the latent CGT should be refelcted in the debits before the asset pool is established.
EG: Mary gets a unit in Bondi as part of her settlement. It was purchased 10 years ago for $500,000 and is now worht $1,500,000. The 1 million capital gain would have to be paid by her if she sells.
1m / 2 = 500,000 (cgt discount for holding for over a year), then income of 500k = CGT of about 250k

The 250k debit (generally 25% of a property's CG) should be attached to the property. Judges have agreed with this post settlement.

 

[SRL1]

Judges have agreed with this post settlement.

Which case/s?

 

[Beeeeeeebee]

Which case/s?

Family law: February 2022 - Law Society Journal


In Shnell & Frey [2021] FedCFamC1A 55 (5 November 2021), the Full Court (Watts, Austin and Tree JJ) considered a wife’s appeal against an order that each party retain their respective property.
The wife argued that it was not possible to discern how the decision was reached and that the rejection of the capital gains tax (‘CGT’) on the possible sale of a property owned by her as a liability was in error

 

[SRL1]

Thanks.
This will come in handy whenever my own case heads to trial.