Carl
I think there are problems in some states with signing a contract before the trust is established. I think WA’s state revenue office is particulary fussy about this and has charged people stamp duty twice if not done correctly. Other states SROs may be less strict in enforcing this.
If it was me, I wouldn’t be taking the risk.
As for your idea of using an existing trust, I think you will find it hard to settle without changing trustees unless you are paying cash for the property. I cannot see an existing trustee offering to guarrantee a loan for you.
Also be careful with outdated trust deeds.
Terryw
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Ok guys I just spoke to the great people at Hall & Wilcox lawyers and they told me that in Victoria the SRO changed law about this which applies from 1st July 2005. Here’s the summary:
Q. So, what’s the position now when mum and dad sign a contract “and/or nominee†at the weekend auction and then speak to their advisor on Monday?
A. This caused problems under the old provisions where mum and dad – upon receiving advice – decided they should hold the property in a trust that didn’t yet exist or a company that they hadn’t yet given instructions to incorporate. By Monday, it was too late to get the property into the appropriate structure.Under the new provisions, there will be greater flexibility for the advisor to suggest an appropriate structure for holding the property and to establish that structure. This won’t always have to happen prior to mum and dad signing the contract.
However there are still situations where you WILL be charged double stamp duty:
-where the second or subsequent transfer involves additional consideration;
-where one of the transfers involves land development; or
-where the transfer involves an option and land development.So don’t go signing a contract “and/or nominee” and then apply for planning permission, or make improvements to the property.
There’s obviously a lot more to it than this but you get the general gist of the new rules here. I’m not a solicitor but if you want to make sure I suggest you talk to the people at Hall & Wilcox. http://www.hallandwilcox.com.au
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the WA labor govt has had a shocking track record for draining tax from property investors and they have continued to turn the screws via the state revenue office. the advice from my legal conveyancer was that the situation has recently become so bad that she would recommend not using nominees at all. I have adopted the view now of just making offers in my own name and doing related party transfers prior to settlement if I have to fick them into another name. they only cost $20.
also I am told that despite how you word the nominees i.e. “and” “or” whatever between them, the WA state revenue dept has adopted a mentality that all these parties are nominated, so to use just one party means transferring from all the other parties.
http://www.megapropertygroup.comINVESTMENT SALES * RENTAL SOLUTIONS * STRATA MANAGEMENT
That sounds very interesting Ausprop,
I have adopted the view now of just making offers in my own name and doing related party transfers prior to settlement if I have to fick them into another name. they only cost $20.So, you’ sign the O & As in your name then do a pretend onsell to the Trust!? And this costs you only 20 bucks!?
While, …
despite how you word the nominees i.e. “and” “or” whatever between them, the WA state revenue dept has adopted a mentality that all these parties are nominated, so to use just one party means transferring from all the other parties.means that Calvion@34 and/or nominees does what you have mentioned above, just before settlement onsells it to ABC Pty Ltd at a cost of only $20!?
I guess I might need some further clarification….
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas Edison
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