Does anyone know when a property is considered sold – on exchange of contracts or settlement? I have recently exchanged on an IP I am selling in NSW. The settlement does not take place until after 1 June when the new 2.25%stamp duty kicks in. Am I liable to pay this?
Yo Ho Samwise
In Victoria (I’m not sure about other states) it is exchange of contracts, usually after the 10% deposit is paid by purchaser. (My husband just sold his Qld property yesterday, and the purchaser only has to pay 5% deposit – Man that’s cheap….I am soooo used to paying 10% deposits.
As for the new stamp duty, can’t answer that as a Victorian (sorry). I am sure the NSW savvy folk will know.
Jo
Oops forgot to add…..
However, the stamp duty is paid at time of settlement (as I assume it would be in NSW as well????)
Jo
Originally posted by Monopoly:(My husband just sold his Qld property yesterday, and the purchaser only has to pay 5% deposit – Man that’s cheap….I am soooo used to paying 10% deposits.Poor thing! In WA, I’m used to paying either $500 or $1000 deposit (they request $1000 but the last two times, $500 has been fine).
See the section in 0-130 about their ‘office policy’ re paying low deposits which says that such deposits should work anywhere.
IIRC for capital gains tax purposes the date is from when contracts are signed.
Regards, Peter
Originally posted by peterp:Quote:Originally posted by Monopoly:Poor thing! In WA, I’m used to paying either $500 or $1000 deposit (they request $1000 but the last two times, $500 has been fine).WOW – $500 that would be great!!! I WISH..LOL It would make so much more sense to pay a smaller deposit, and then make it up in the balance on settlement – at least that way, your money can sit in the bank a bit longer and grow a bit more.
Oh well, them’s the breaks! [hmm][hmmm][glum2]
Jo
Hi Monopoly,
You have been ripped off – there is no legal requirement for you to put a 10% deposit down in Victoria.
From http://www.loan.echoice.com.au/pages/h_vic_deposit.html
I also recommend a check with the legislators in your respective states – some of these household myths incorrectly develop ‘law’ status without it being enshrined in state or federal legislation.
“Both sale deposit and property insurance will become issues as you approach the exchange of contracts. Note: this presentation is not intended to replace formal professional advice.
How much is the deposit? Most often buyers and sellers expect it to be 10% of the purchase price.
However, it can be any amount agreed by you and the seller.
Where is the deposit held?The seller’s agent or solicitor can hold it in a trust account. This means that the money is not owned by the solicitor or agent, but is held in trust until it is released.
How is the deposit released?There is a law called the Sale of Land Act that deals with deposits.
The seller can ask you to release the deposit before settlement. To do this they must:
* give you information about any mortgages or caveats that affect the land; and
* there must be nothing in the contract that prevents the release of the deposit money.You can ask the seller to provide written proof that the mortgage (if there is one) will be paid out at settlement, so you are guaranteed possession of the property on that date.
If someone is doing your conveyancing, they may want other questions answered before allowing the deposit to be released.
If the seller asks you to release the deposit, you have 28 days to respond, otherwise it is assumed that you have agreed.”
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Monopoly,
ditto Derek.
Nowhere in Australia is there a legally mandated level of deposit that must be paid.
We never offer 10% as a deposit.
Cheers,
Aceyducey
>>Nowhere in Australia is there a legally mandated level of deposit that must be paid.<<
One can exchange putting down any amount as long as the vendor agrees.
However, I believe that if one puts down less than 10% and if subsequently the buyer walks away from his obligations then the vendor can sue for at least the balance of the ten percent.
(Presumably the vendor may be able to sue for more, I don’t know that bit.)
Does anyone know ?
Pisces
Thanks Derek,
I guess I have always paid the (expected) 10% deposit. Maybe I should have read the contract for the finer print…damn, I knew I should’ve got that new eye-glass prescription!!! [blink] LOL
Anyway, it really doesn’t matter, most of my negotiated settlements are 30 days anyway (which is what I prefer) when I buy, to tenant them sooner. So it really doesn’t make too much of a difference.
Thanks for the info guys, I will keep that in mind next time (especially if I am strapped for cash!!!!)
Jo
Thanks for your reply Monopoly – Does anyone else think a property is sold on exchange of contracts?
I agree that any amount for deposit is ok if seller agrees. The purchaser is still liable for the full 10% if he reneges on contract. – Usually states this in the contract.Yo Ho Samwise
Originally posted by Samwise:I agree that any amount for deposit is ok if seller agrees. The purchaser is still liable for the full 10% if he reneges on contract. – Usually states this in the contract.
Change the contract!
Think outside the square.
We NEVER pay 10% deposit.
Cheers,
Aceyducey
The smallest deposit we ever paid was $200 and used equity as the security so didn’t need to add any further monies to the deal at settlement. It’s cashflow neutral too, so pays for itself.
By the way, I though it was sold as at change of contract too, but can’t you check with your settlement agency or soliciotr or whatever it is your state has? Best to get the correct answer from the professionals, that’s what you’re paying them for.
No offense PurpleKiss, I just don’t like the colour you used to dye your hair.
I liked you much better when you were a redhead.[inlove]
Pisces
Originally posted by PurpleKiss:
[
By the way, I though it was sold as at change of contract too, but can’t you check with your settlement agency or soliciotr or whatever it is your state has? Best to get the correct answer from the professionals, that’s what you’re paying them for.Solicitor is unsure as it’s new legislation yet to be introduced. I have found solicitors are not always too cluey. – no offence to any solicitors on this forum.[blush2]
Yo Ho Samwise
I beleive from a tax point of view, a sale is consider to occur when the contract is exchanged and is unconditional.
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
I’m sure in NSW a property is considered sold on exchange of contracts as until exchange, the agent can still show and sell the property – so they told us when we were a bit slow to exchange on a house a couple of years ago. They were really mean as we had paid the full 10% when we decided to purchase. Learnt a less there.
Your accountant would be the one to say whether you will have to pay the “exit tax” though.
Anna
Thanks Terryw and annaw2 – I thought that was the case
– I’ve asked my accountant – my wonderful partner – who doesn’t have a clue.[hmm]
Yo Ho Samwise
Sam, for the first home buyers to get the discounted stamp duty, I believe Mr Egan suggested they ask their vendors to ‘rip up’ the contract and do a new one. This says that if contracts had already exchanged, they did not get the discount.
I would say that this is the same in your case. ie, you got in first![biggrin], so no stamp duty on exit for you[suave2].
Cheers
Mel
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