Has anyone done this? Buying a house at cheap low price, and then presell it to someone else for retail (not wrap). HOwever, how do we avoid settling the house ourself? Is there a way to avoid settling so to avoid stamp duty etc?
***********************
fullout, one way is via the Option contract. I believe another involves putting ‘and/or nominee’, but there are specific rules (I think) about how this works, and whether or not you have to have the purchaser lined up beforehand.
Cheers
Melhi fullout and melbear
i was thinking about signing “and or nominee”, but the problem would be the purchaser would know what price you paid for the property. so effectively all you would be is a buyers agent. there would be no Capital gains but there would be income tax.
regards westanHi Westan
That’s true about the purchaser knowing your price. I think there are some ways around that (although I don’t know if they are easy/legal to do). You could get the vendor to rescind the contract with you, and draw up a new one with your buyer at the higher price, and he would pay you (as a disbursement to make sure you got your money) at settlement. The problem with this is that then the vendor knows what you are doing, and might want to sell it at that price themselves.
Either way, someobody will see you are making money, and I guess it depends whether or not the vendor/purchaser know that they could have negotiated the same deal themselves, or are just happy that they have a sale/purchase and aren’t worried about you making money.
Sometimes, it’s just easier to exchange contracts yourself, and pay the stamp duty.
Cheers
MelIsn’t what fullout has described known as “flipping”? Isn’t that what deposit bonds are? Or is that only for OTP apartments?
kay henry
Funny how people don’t have a problem with buying and reselling immediately for a higher price, but doing the same thing only on selling through an installment contract makes us evil [}
].CHeers
Leigh K[]Carve your own path and lead the way …
Deposit bonds aren’t only for OTP apartments. We recently used one during the purchase of our PPOR while we were waiting for $ to come through from the sale of an IP share. Our mortgage broker suggested it to us and it was very handy – we were ‘gazumped’ on the first property we were to purchase, so the deposit bond was cancelled and the fee credited to us. When the next one came along we had everything in place and were able to secure the deal the same evening we inspected.
Hi kay
A deposit bond is the same as your cash deposit, so it helps you out to secure the property without any cash. However, you still have to exchange contracts the usual way, so would have to pay all costs like stamp duty.
Cheers
Melhi guys
if i use a deposit bond, i will still have to pay up the deposit wont i? isnt it usually people use dep bonds for buying off the plan?
***********************
Fullout
You might like to refer to a previous post on the subject of Put & Call Options when I outlined how we utilise them and the benefits of such stretegy.
Cheers Richard
[email protected]
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Hi fullout
A deposit bond is often used for OTP purchases as otherwise you would tie up your cash for potentially a long period of time. However, you can still use them for shorter settlements, if your money is tied up in a term deposit for a further 2 months etc., or if you need to settle on your sale before having cash to purchase.
It means at settlement you basically have to cough up full price, so you don’t get out of paying the deposit, but it can delay it if you can do other things in the meantime with your cash.
Cheers
MelFullout
A deposit bond is just a guarrantee. You pay a fee and the bond compnay guarrantees that they will pay the vendor the amount promised if you do not settle. If they do that, then they are going to be chasing you for the amount they guarranteed.
Terryw
Discover Home Loans
North Sydney
[email protected]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
guys,
actually, there’s this friend of a friend who wants to sell his unit in melbourne, not really in the city, but close to the uni. It is in his late mother’s name, and he says the name will be transferred to his early next year, cos his mum had a will.
The agent told him can sell about $270k, but i think in this market especially in melbourne, plus its a unit with $500 body croporate fees every 3 months,…I am thinking of putting a lower offer, buy it as my own home, maybe live there a while, then sell it off without CGT.
Another way is to buy it low, then sell it before settlement (can this be done at all?), and then have the new buyer pay the seller the money so i can escape stamp duty.My friend told me for a property $200+ the stamp duty is about 10k? is that right?
***********************
].
]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
