Hi I am contemplating buying up to 3 separate properties that are under the same vendor with the view towards securing them on favourable terms and selling one off immediately to an associate. I know in all likelihood this is like flipping so will attract CGT and stamp duty.
My question is, what about if I don’t sign any sale contracts with the purchaser, but secure options to buy?
I know vendors always want to see written offers during negotiations, therefore perhaps it needs to be handled under a “memorandum of understanding” environment? ie negotiate outside of sale contracts & offers, with principle understanding $x is the sale price if I buy all 3 properties, and formal sale contracts will only be entered into with the final purchasers…
Scarecrow7
“In times of crisis, both danger and opportunity are present”In my opinion, you would probably need an option contract with the vendor, and then you could sell the option to the end purchaser. You could probably avoid paying stamp duty on the land with this technique, as you would never settle or exchange contracts, however stamp duty may be payable on the option contracts-better check with the Office of State Revenue in your state.
You would have to pay tax on your profit, CGT won’t come into play as you won’t have owned the contracts for more than a year, so it will be straight income tax.
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
Thanks for that Terryw, I shall investigate further as it sounds promising…you’re a wealth of knowledge!
Scarecrow7
“In times of crisis, both danger and opportunity are present”
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