I was looking to take an option on residental properties to onsell or assign a call option, but came accross two main problems, if anyone can help.
Firstly, I have contacted a number of solicitors, and when i explain what i intend doing, which is to sign up a vendor through a call option, then to market the property, find a buyer, then onsell the property. Fairly straight forward i would think, but almost every solicitor says not interested, never returns calls, or seems to shy away. As well, I just want to get a standard option drawn up to use as a turnkey contract with just the basic info changed each time for each different sale.
Secondly, one solicitor has told me that using options now incurs full stamp duty in Victoria, in fact a double stamp duty is payable, both from just taking on the option, then the actual purchaser has to again obviously pay the full stamp duty.So whether I do a normal Lease-Option or using a Call option on it's own, both would incur full stamp duty in Victoria.
Does anyone know about this? or has anyone got suggestions whether I have got the wrong info or is there a legal way around paying the full stamp duty on the option, or would I just have to pay the duty on the actual option consideration?
Any helpful advice appreciated.
Jayman
[email protected]As far as I am aware, you can only pay stamp duty on the value of the contract ie the option eg if you have paid the vendor $10k for a 6 month option contingent upon a number of conditiions (DA, subdivision approval etc) then you only pay on the value of the option contract as there is no certainty that you are going to proceed with the contract to conclusion and exercise the option. The value of the option is how much you put down & give to the vendor not the purchase price of the property. In this way the stamp duty is payable only upon the exercise of the option.
You might contact Legalworks in Melbourne – they are reasonably savvy on several property fronts.
Hi Jayman
I agree with Scott, i.e you are liable to pay stamp duty on the option consideration, not the strike price.
As regards your business idea regarding options, you may find this thread interesting:
https://www.propertyinvesting.com/forums/property-investing/general-property/4324130Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Firstly to Scot No Mates,
Thank you for your reply, That's what i thought, that the cost of the option would be what you pay any duty etc on, and if you don't exercise it lapses and the vendor would keep the option consideration.
I have tried to contact Legalworks down here, but they have moved and they can't be found. I have also contacted and been in to see Lewis O'Brien whom a lot of people use for doing lease options etc, but didn't get anywhere with him, as I wanted to market call options a little different, but am now talking to one solicitor that seems to know his stuff, problem seems to be sice I moved here from Sydney, it seems that most Solicitors are pretty stuck in their ways and not prepared to look outside the square.
To Paul Dobson.
Thank you for your reply, it sounds like the option agreement you have is a definite fit for what I am looking at doing, but again, Victorial Real Estate rules are somewhat different to NSW etc, but certainly contracts can be done to conform to the different rules, once I clarify the stamp duty rules and have the correct contract, everything else will fall into place, as normal conveyancing between buyer and seller will take over once i have marketed the property using a few different methods and found a buyer. Would you mind if I called you re your knowledge and contracts?Always grateful for further help or advice.
Business Email. [email protected]
Oops, my apologies, the Legalworks business was absorbed into Matthew Shaw & Assoc. (They are definitely still around).
Thanks for that info, i have been in contact with Mathew Shaw, and he is very knowlegable about the use of options under the current laws in Victoria. There are a number of grey areas that have to be clarified as regards stamp duty, it's not as clear cut as in other states it seems, as I want to market properties under option in different ways.
Jayman
[email protected]Hi Jayman
Feel free. I arrive back in Australia on Thursday evening, so give me a call anytime from Friday on.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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