Richard, 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.
mancityfanMCF
The Call Option Contract would have a draft purchase contract within the document which would normally be a cash unconditional contract with settlement of 30 days (Qld anyway).
Once the Option was exercised the nominated party would be entered into the contract as the purchaser and the purchase price would be the original price agreed with the Vendor.
For assigning the Option a fee would be charged and this would represent the profit.
The end purchaser would pay the Vendor the original sale amount.
Stamp duty would be paid on the Contract price which is the original sale amount although in certain States (not Qld) duty would also be payable on the Option Contract.
No licensed is required in Qld unless you are doing more than 6 a year when you would required to hold a Property Developers License.
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Richard, thanks for the info.
mancityfanOriginally posted by mancityfan:Richard, 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.
mancityfanmancityfan
My understanding is, when you own an option on some land, then you have an equitable interest in the land. Therefore you can buy and sell without the need for a licence, as it is your ‘property’.
Stamp duty would only come into play if you were to settle. You are merely onselling the option.
(ps. What is a Man city? a city full of men?)[blink]
Terryw
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Terry, 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]Hi Mancityfan
You do not need a contract for equitbale interest. Just think of someone married, but the property is in the husband’s name. THe wife will have an equitable interest in the property due to her relationship to the husband.
Also you could have lent money to the owner of the land, have a mortgage over hte land, and I think this would give you an equtiable interest.
But I am not a lawyer, and haven’t studied this – but would like to!
And another point, a option is a contract. (in most states you only have stamp duty on the value of the option contract, not the Contract of sale, when buying a option)
Terryw
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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.
mancityfanHello all
Interesting thread. As a total novice to this area I have a basic question. [blush2]
What is the normal price of an option for a residential property. I mean is there some sort of “formula” based on the price of the property and the period of the option?
Thanks in advance
ElkaMancityfan
Equitable interest means someone has an interest (ownership) in the property, but there name isn’t on the title. There would usually be a contract, but maybe not always. Some ways you could get equitable interest include – marriage, defacto, purchase an option, mortgage, inheritance, being a beneficiary in a trust that owns the property etc.
Elka, an option can be anything. But usually, from what i have seen around 1-2% of value of the property.
Terryw
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Best I have done one for is a Dollar!
Had the house for 10 minutes (30 actually) and onsold the option for a $2,000 Profit ($1999 actual – Minus $5.00 gas to get hte paperwork squiggled on)
Not bad for ten Minutes aye [strum]
Why Rent? Rent 2 own!
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