A few questions from the new guy… sorry, really long

Thanks Jack and Terry,

I've spoken to our accountant about using a trust for the farm (he does this with his) We would have to pay stamp duty if we bought through a trust but if we buy in individual names we can receive a stamp duty exemption because it's a rural property being passed on from ancestors. This will save around $65000 so it was hard to pass it up. 

We have pre-approval for a residential loan and they're using the full 1.5 mill for the valuation (some banks used only the 750k). We're okay with serviceability for the farm, I'm more concerned about investing afterwards, maybe I should worry about it down the track. Being a residential loan, I was hoping they might use the residential criteria regarding using the LVR, although I guess we can't have it both ways if we're asking them to consider the tax advantages of the farm as income for our next IP purchase???)

The farm will be primary production but as a hobby and we hope to turn over around 20k in cattle. This will be an income of around $10000 but it will always run in the red, especially when repayments are taken into consideration.

Jack, I think I'll have to track down one of those "extremely knowledgeable and experienced brokers on this forum" you speak so highly of because they obviously know the game inside out. 

Thanks again.
 

Sorry Terry I should clarify,
When I say a hobby I mean it won't make enough for my full time income, especially with the mortgage on it. Its 100 acres in NSW and we need a turn over of 20k which is quite achievable (my folks have done it forever). Our solicitor researched the stamp duty concession thoroughly and he's happy so hopefully it's all legit.

… when I say rural, I mean primary production

Well both. Parents are exempt from CGT and we benefit the state's Stamp Duty exemption.

Not at all, I appreciate the conversation. I will have a look at the paperwork tonight and get back to you. It's all gobbledy-gook to me

Terry, the exemption I spoke of is not the ATO but the Office of State Revenue because as you mentioned Stamp Duty is state based.

According to our solicitor it comes under Section 274 of the Duties Act 1997, relating to ancentory laws and land use for primary production. I know it's on the OSR website – I found the emendments to the Act on OSR but I could only find the Act on another site (http://www.austlii.edu.au/au/legis/nsw/consol_act/da199793/s274.html#person_directing) Click on the link for detailed info but this is the nuts and bolts of it:

274 Transfer of certain business property between family members

(1) Duty under this Act is not chargeable in respect of a transfer or agreement for the sale or transfer of land, a lease of land, or a transfer or assignment of a lease or permit in respect of land, used for primary production together with any other property that is an integral part of the business of primary production, if the Chief Commissioner is satisfied that:
(a) the transferor, lessor or assignor, or the person directing the transferor, lessor or assignor, is an ancestor of the transferee, lessee or assignee, and
(b) the land was land used for primary production in connection with a business carried on by the transferee, lessee or assignee, or by an ancestor of the transferee, lessee or assignee, (whether alone or with others) immediately before the transaction or the date of first execution of the instrument, and
 (c) the business is to continue to be carried on by the transferee, lessee or assignee (whether alone or with others).

We meet those criteria with my parents being the transferor and myself being the transferee.  Also the amendment (2005) states:
– amendment to section 274 makes it clear that an exemption for the transfer of land used for primary production between family members does not apply if the person acquiring the land does so as a trustee.

Like I said, it's all goobledy-gook to me but my solicitor said it's all good and will save me 65 grand so who am I to argue!

Hope this helps