cost to transfer the title of a property

[north shore]

Hi,
Our accountant is recommending changing our property from a laqc to a partnership. We need to do a title change as well which would involve a sale and purchase agreement.
Has anybody done this and what did it cost approx? Who did you use? we are thinking of the home transfer centre.
Thanks

[Winston001]

You'll also need a new mortgage because the current debt is owed by the company, not the partnership. That isn't a problem but must be dealt with.

A lawyer? You would have needed a lawyer to buy the property - any reason why that person wouldn't be your first thought? They will already be familiar with your circumstances.

[north shore]

Hi Winston, thanks, yes westpac are handling that one, nicely only going to charge me $100 to discharge it and give me a new one. Hope they keep to that!! Was hitting them up to drop the rate on our other floating loans while I was on the phone to them, since she couldn't hang up on me.
We brought it a few years ago, since then our lawyer passed away, just haven't needed a lawyer.

[Rosco]

Why do you want to change to a partnership?
Also why didn't you transition before 30/9/11?

If you originally had a reason to become an LAQC, then wouldn't there be a reason to use an LTC?

Ross

[north shore]

Hi Rosco,
We now have a different accountant and they are recommending to change from a laqc to a partnership rather than a ltc. I have heard the reasoning for a ltc from our previous one and wasn't overly happy with some of it. This accountant I think more favours partnerships.
We also have another rental which has always been in a partnership.
Why do you say before 30/9/11?
We changed to this accountant last year, they had a bit of trouble sorting everything out from the previous accountant. It also took a while to get IRD's approval or something to change to a partnership as under the Laqc my husband had 100% shares, so we had to change the shareholding first as ird or someone declined the change. Apparently the accountants will notify IRD when we file our 2011-2012 return, that the laqc will cease trading from 31/03/12.

[Eugene]

I have a very nasty mess with my property structure now and have had to do a lot of research on stuff I thought I didn't need to know. I wish I hadn't trusted my accountant. I asked them to fix it and they sacked me. I don't know what the moral of this story is. I am still confused.

[Shane D]

The moral of the 2 stories above. Go to a property tax specialist such as Rosco, or GRA in New Market.

I have using GRA for a few years. Trust/company structure and tax time is smoooooooooooth sailing.

Shane

[buxlo122]

The 30/9/11 was the date the tranitional elections for LTCs were ment to be filed. What kind of entity do u have at the moment?
Are your properties in a profit/loss situation?

[Rosco]

Hi North Shore,

You don't have an LAQC to 31/3/12. All LAQC's ceased at 31/3/11.

If you did nothing by 30/9/11(first transition period), then by default your LAQC became a QC from 1/4/11. In your case, most likely your company was a QC from 1/4/11 to 31/3/12, this means no losses to shareholders, and any losses will be stuck in the company.

I haven't really had to look at the second transition period, which is 1/4/12 to 30/9/12, which allows old LAQC's to transfer to LTC's, sole trader or partnership, without any tax costs such as depreciation recovery.

But, if your LAQC was 100% owned by your husband, then you could transition to a sole trader, but not a 50/50 partnership. To change to 50/50 partnership in second transition (as I said before I haven't had to look into this, as all our clients have done in 1st transition) I would have thought you would have needed to change LAQC shareholding to 50/50 in March 2011 and then reelected to become LAQC within 63 days.

I would suggest that you get your current accountant to jot down some simple notes on what the process is, so that you know what it is and are also happy with it. Also make sure you see a copy of any letter from IRD confirming the transition and their acceptance. Make sure this is all done by 30/9/12, otherwise you might be stuck as QC!

Also if you originally wanted 100% shares to your Husband in LTC. Is that because he was on a higher tax rate, therefore having sole trader or 100% LTC might work better for you? A lot of people liked LAQC's because of the flexibility of being able to change shareholding later, and LTC's do have some catches, but often allow you to change shareholding (just get good advice and be careful).

With costs to transfer. I would have thought $500 to transfer out of Company including any loan work and $500 to transfer in to Partnership, so maybe $1,000 legal costs. Just my guess.

Ross

[north shore]

thanks everybody, our new accountant which we got in July 2011 (after not being happy with previous one insisting on a ltc and advocating eventually myself having to bill the company etc when the rentals made a profit, etc), long story easiest way was to go to a new one and see what they said we should do.
They think our laqc was set up wrong as I should of held at least one share, ird rejected the request to change to a partnership because of it, this was done before October 2011. Yes our losses are stuck in the company for the 2011/12 year, but we should get them back this time as I can invoice the company because of my work.
We have now altered the shareholding and reapplied to Ird to transition to a partnership, which has now been granted. I received a letter from IRD to confirm it.
I am happy that it will change to a partnership, I think from a legal stand it offers protection to both my husband and myself if anything unforseeable happens......
I do have a outline of how they were doing the change.
Yes previous one set it up as he wanted hubby to get the losses as he was the higher income earner, with the removal of depreciation and having low interest rates, we aren't making as big a loss and will even be making a profit in the next few years.