Will Capital Gains Tax (CGT) event A1 happen when you remove your names from the title of the property?
No. CGT event A1 occurs when there is an ownership of a CGT asset. However, CGT event A1 does not occur if there is only a change of legal ownership and not a change of beneficial ownership. Based on your facts, the Commissioner accepts that in your circumstances, although you were a legal owner of the property, it was never intended for you to have any beneficial ownership of the property and it can be reasonably concluded that at the time of change of legal ownership when the name is transferred, that no change in the beneficial ownership will occur. Therefore, CGT event A1 will not occur when the name is transferred, and the legal ownership ends. This ruling applies for the following period : Year ended 30 June 20YY The scheme commenced on: 1 July 20YY
You purchased a property together with your person A as tenants in common. Person A was unable to obtain finance without having you included on the bank finance and title of the property. You have a joint XX bank loan account and the property settled on DD MM 20YY. Although you were a party to the mortgage, you never made any payments to the loan or contributed in any way financially to the purchase or the upkeep of the property. The property was always person A's main residence. The property was never used to derive assessable income. You never treated the property as your asset, nor did you receive any rent or claim any deductions for expenses associated with the property. You now want to remove your name from the title of the property and the loan account. There will be no consideration paid to you for relinquishing your legal ownership. Person A remains living at the Property.
Income tax Assessment Act 1997 section 102-20. Income tax Assessment Act 1997 section 104-10