Hi,
I’m looking at selling the last 3 or 4 houses in one entity (a company).
There is existing finance in place from a big 4 bank who have in-principle agreed to transfer the loan guarantees to a new owner if they qualify.
I am presuming they could be sold in one go by transferring the shares and the directorship with the new owner signing the bank guarantees.
Total value would be under 800k. Last time I looked, this was below the land rich tax threshold so my initial assumption is that an incoming buyer may not have to pay stamp duty or it’s equivalent on the transfer.
Can anyone clarify this or tell me differently, and also what other tax related issues might apply to the incoming buyer?
Thanks,
PhilI think that would be the case in NSW last time I looked. Stamp duty varies depending on state.
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
Why is a buyer going to purchase your company structure when there will presumably be a potential capital gains tax liability on the properties the company owns when the company sells the properties ie say company purchased properties for $600K and you are selling the co for $800K, also the purchaser won't get benefit of 50% discount on properties owned in company structure
CRJ
I think CGT would be payable on the value of the shares transfered – but you raise an interesting point. What happens if the company sells one property?
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
Terryw wrote:CRJI think CGT would be payable on the value of the shares transfered – but you raise an interesting point. What happens if the company sells one property?
Yes, CGT will apply to the sale of the shares, in which case, provided that the shares have been held for at least 12 months, the 50% discount may apply.
If the company sells one of the properties directly, the company pays CGT without discount. The gain will become part of the retained profits of the company but because the company has paid tax on the gain, the underlying shareholder will get a franked dividend when the gain is eventually distributed out of the company.
I don't think there are any unusual tax implications to the purchaser. Whatever they pay will become the tax cost base of the shares.
Eddie
[email protected]Thanks again Eddie
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 the feedback guys. I’ll do whatever comes along first.
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