Lease Options in Victoria – back on the table……?

Hi All

The following was today distributed to all Vendor Finance Association members.  It seems to indicate the the Vic State Revenue Office may be coming to its senses (albeit slowly) regarding Lease/Option and Stamp Duty on residential purchases.  We live in hope

Hello all
We would like to let everyone know of some very exciting news that will effect the majority of Vendor Financiers and some property investors, in Victoria.

Finding good lawyers that are pro active for their clients is sometimes more than a little hard to find, however Lewis O'brien has always been on the front line when it comes to Vendor Finance especially in Victoria.

As many property investors in Victoria would know the State Government in their infinite wisdom decided to introduce Stamp Duty on options to purchase real estate if there is a lease attached. This Stamp Duty is payable on the entire purchase amount and due upfront.  As compared to
other States where the Stamp Duty payable was based on the option fee paid. Given that Stamp Duty in Victoria is paid at 'transfer of title' this seemed a totally illogical step. However what is, is!

Not willing to just sit back and accept this move we have been working with Lewis to try and get the State Revenue Office to listen to our argument.

After much effort our request HAS been heard and we now have a 'private ruling' on the situation regarding Stamp Duty which opens the doors to a 'general tax ruling' on one of our own property
transactions.

The general theme of the ruling goes like this:
Stamp Duty on a lease/ option agreement is payable but is able to be deferred until the option is 'exercised'.  If you take this option(which we think you you will) the SRO requests that you pay 4.8% interest on the unpaid stamp duty amount.
Bonus: the interest can also be deferred until you 'exercise' the option. By using the correct contractual clauses in your paperwork this allows for only the required stamp duty to be paid at the logical time…when you exercise the option to purchase!

It is essential that when you purchase a property on a Lease Option and go on to sell the house on 'terms' using a lease option that the paperwork is set up exactly 'right' so we request that if you would
like to take advantage of this development then use the new lease option paperwork that Lewis has drawn up. You can contact him in the usual manner at
Lewis O'Brien and Associates
03 9888 6388
[email protected]

This is definitely a step in the right direction to resolving the
Stamp Duty issue.

We would like to thank Lewis for working tirelessly to improve the situation for the Vendor Finance community as a whole as well as the support he gives to us his clients

David and Julie Siacci