Forum Replies Created
Hi Terry, nice point abput the marriage thing. Problem is there would then be two contracts required for you, assuming you were the wife, to have an equitable interest. Contract number one must have been your husband’s contract to purchase his equitable interest in the land. Contract number two is a marriage contract, or legal de facto relationship.
If, on the other hand you had lent money on a mortgage there would have been stamp duty paid on the loan document, and your interest would be taxable income. Your equitable interest can only cover the amount of your loan plus costs associated with the recovery of the loan should the loan default.
Yes an option would incur stamp duty on it’s value.
Have a great day.
mancityfanTerry, as I understand things, if you have an equitable interest in the land, you must have had a contract to prove this. If so, you are liable for stamp duty. which is the point I am trying to make. You cannot have an interest in land without it being contractual, and if so stamp duty will be levied on that contract.
You are correct about the icence issue. If it is your land…you can trade it as you wish without being licenced, provided the relevant autorities do not class you as a property developer. if they do you will need a property developers licence.
A mancityfan is a person who supports Manchester City Football Club. the poor cousins of the world famous Manchester United Football Club. But, clearly a lot smarter than the others….hee hee.[oneeyed]Richard, thanks for the info.
mancityfanRichard, sorry forgot to ask. If you are never the intended owner of the property, and you are exempt from stamp duty as a result, however, you have negotiated the sale of the property to another party, then are you not in breach of the Real Estate laws regarding licensing.
I understand that if you are in the business of negotiating the sale of Real Estate you must be licensed. Especially in Queensland, where I live.
If you are not negotiating the sale, and argue that you were a beneficial owner at some time, then wouldn’t stamp duty be payable.
Thanks again.
mancityfanRichard, thanks for your comments. Can you please clarify for me…”You then go and find someone who wants to buy the property. You then get them to sign a constract of sale with the original vendor.” at what price is this contract written?
Is it written at the original price PLUS your option fee? Or, is it written at the strike price of the option?
if it is written at the original pirce pLUS your option fee, it is safe to assume that the original vendor would be the one paying your option fee. is this correct?
If the contract is written at the original strike price, and you charge a fee to the ultimate buyer, then surely the buyer must become aware of your original purchase price when they execute the contract.
Thanks for the help.
mancityfanInteresting comment about not owning the property. Stamp duty is paid on the contract value, not the ownership of the property. The Stamp Duties Office will charge you stamp duty on the value of the contract. If you have done multiple deals in this way and not paid any stamp duty you may want to seek some legal advice before doing any more.
Happy investingWhy do people buy investment properties? If the motivation is simply tax deductions, then perhaps they should look at alternative investments. If, on the other hand they buy for the long term, surely any short term negative loss would be well and truly offset over the long term by the end value of the property. Utilising P&I loans for 30 years simply means that the tenants will eventually pay off ALL your debt on the property. The decision to buy should then be made on your ability to fund any cash flow shortages. The net cost of these cash flows allows for the controlling of the asset value over the entire term of ownership. Many people have made lots of money holding vacant land in prime areas. no income, no tax breaks, just good capital growth.
What do you do with the funds from positive geared property? Buy more property? Why? To increase your net wealth over time in equity in the properties. Same end result. The difference may be the potential capital growth of the positive versus negative geared property. Your decision should be made, assuming you can afford to hold any property, on the property you believe will add the most value at the end of the day. Positive or negative.
