Hi Everyone,
I'm about to put a 5 % deposit and a 6month settlement on a property to get plans and permits on the land and never settle.
Before 6 months is up I'm hoping to have my plans and permits and the realestate agent will be able to find me a
investor/builder/developer buyer who will then settle on the property with the vendors.The way I will make money is I've put a deposit on the property at a low price compared to what it will be worth with plans and permits and the developer is paying the higher price and therefore he is buying the contract from me.
My lawyer tells me the I will be trigger stamp duty even though I'm not settling on the property because the initial price is different for the property compared to the price the developer pays.
IS this true. can someone help.
Thank you
Mr ElmoHi Elmo
Even using the old trick of an "and or nominee" clause you will still trigger double stamp duty.
You may be able to make it process work with a call option but, from what you've mentioned, your vendor thinks she's getting a straight sale. Not sure if your vendor is going to take kindly to an option strategy at this late point.
Possibly take some time to research and learn about call options and the various ways they can be used.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
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Yes..will trigger the stamp duty because OSR will treat it as SALE
make sure that you include stamp duty in your profit calculation
Thanks very much
Would the stamp duty be triggered on the initial buying price of property or the price I sell to the builder.
Someone also suggested that it will be on what the builder paid -the price that I initially settled on with vendors, the difference is what I will pay stamp duty on
I'm getting lots of different answersThankyou and have a great day
What you are doing is onselling the property. Whether you settle or not doesn't really come into it. You will pay stamp duty on your contract price and the person you sell it to will pay stamp duty on their contract price.
A possible way to reduce stamp duty is to buy an option on the property and then onsell the option. It may save you money, depending on the state you are in – don't think it works in Vic anymore though.
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 think I've done this before but I can't recall what its called. It is a simultaneous settlement and you will have to seek the seller' s permission for the transfer documents to be transferred from A to C as opposed to A to be to C – which means the property never really transferred to you.
You will need to speak to a very experienced solicitor as I was guided by my principal at the time.
Yes you can do that, but stamp duty will still be payable.
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
hmmm.. I remember, the reason that we did it that way was so that B did not have to pay stamp duty. C, on the other hand, will have to.
The downside to this is that A will see how much you sold the property for and will probably not agree to a simultanous settlement.
Maybe you could do it by getting the A to rescind the contract to B and enter a contract with C and B get a fee out of it. But A would be unlikely to want to give B anything. The Office of State Revenue would still want stamp duty from B if there was a simultaneous settlement with B and then onto C though – I am pretty sure. What state did you do it in?
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
Hi – Yes this is a simultaneous settlement and I have dealth with many of these in buying/ selling land off the plan not registered and then selling it when registered.
You will need a very good experienced solicitor that is on the ball
You will also need a Plan B- What happens if you cant onsell? are you also prepared and ready for settlement as if you cant sell you have to be ready to settle also.
Normally when I do this I make sure I can settle regardless or have a back up plan- as it is not always a sure thing that you can sell, or the the next buyer will be able to settle when required also.
Kylie – goodluckThanks so much for your help guys.
Sounded like a great idea at the time, stamp duty will eat into the profits and in Vic its a large chunk.
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