Hi,
Im looking at building 2 townhouses on a block of land that my Mother fully owns (PPOR & 100% of title in her name) in Melbourne.
For the Loan to be approved (To Construct) the title has to be in my name, which is not a problem except this will trigger a sale and me having to pay stamp duty (around 35k).
Is there ways to reduce the stamp duty?
For example
– Can my name simply be put onto the Title (50%) without a Sale Process Occurring via lawyer?
– If not, I assume that a transaction will occur where I buy 50% of the property and pay the stamp duty at 50% the value of the property. Is that correct? This will reduce my stamp duty to around 17kfrom what i have read on this forum you can get a loan regardless of who's name is on the title.
i'm sure someone better informed will answer your question..You cannot change ownership without paying stamp duty – generally, an exemption in some situations is for transfers between spouses.
You could transfer half the house, or even less, such as 1% to get your name on title. you will only pay stamp duty on the value of the portion transferred. See if your bank is happy with this first though – get a preapproval, or even a full approval first.
Also consider the other aspects of the deal:
– effect on centrelink benefits for your mum – current/future.
– asset protection benefits
– estate planning – any siblings who may be annoyed for e.g.
– CGTTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:You cannot change ownership without paying stamp duty – generally, an exemption in some situations is for transfers between spouses.You could transfer half the house, or even less, such as 1% to get your name on title. you will only pay stamp duty on the value of the portion transferred. See if your bank is happy with this first though – get a preapproval, or even a full approval first………….g.
– CGTThanks Terryw,
Once the townhouses are built and land sub-divided, the idea is that one of the townhouses/land will be under my name and the other will be under my mother’s name.
So it looks like the 1% option won’t really be viable as i’ll be paying 50% stamp duty during the sub division anyways.
I assume the best option is to sub-divide first, and then transfer one of the plots into my name, which means i pay around 17k stamp duty. Once sub-divided, i can begin the construction of both townhouses.
Would that be the best process?
What about talking to a lawyer about partitioning the land. You can buy 50% now and enter into a deed of partition with your mum. You then later divide the land and can do so without stamp duty if the portions transferred as the same as the partition agreement.
Otherwise you may find you pay stamp duty going in and then stamp duty on subdivision as well as you will be changing ownership then.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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