Just wondering if any of the experienced investors/developers could offer some suggestions to this scenario:
Imminent land release due soon.
Conditions will be placed on the release such that ‘local’buyers will be offered first right of refusal on an ‘expression of interest’ basis.Many local buyers, who will have this first right of refusal, do not want to buy a block.
However, they are happy for me to buy the block on the basis that they do not incur any costs, and in return the receive some compensation for going through the process.There will be some conditions on the purchase such that the buyer will have to build on the block within a cetain timeframe, and not resell it as a vacant block.
What sort of instrument can I use to protect the buyer such that they are not left with the financial liability of holding a block they don’t want,and also protects me such that I get title and ownership once construction is complete ?
eg…would you use a call option, ora put/call option ?
Thanks for any suggestions..
kpKP
A call option will only work if the developer will accept such instrument which i very much doubt.
From what you state the buyer is unable to purchase and resell it as a vacant block of land so reselling is not an option.
One consideration would be to purchase it in a Pty Ltd name and then you purchase the shares in the company.
As long as the company is not considered “Land Rich” i believe the figure is now $1.1M then you will have no duty to pay on the share transfer as you do on the sale of the property.
You could set up a series of shelf companies and then agree to purchase the shares in each at a given date being after the company signed the purchase contract.
Cheers Richard
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Richard Taylor | Australia's leading private lender
Hi Richard
A comment you made in your reply interests me. Do you mean that assetts held in the name of a company in Qld will attract no stamp duty on sale if you sell the whole company.
Does CGT still apply??Giddo
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Giddo
I beleive that is the case in NSW too. Stamp duty may still apply on the transfer of shares (Except companies formed in VIC?), but this should be much lower.
Terryw
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yes Giddo
Cheers Richard
Ph: 07 3720 1888
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
hi Qlds007
with qld companies if the director change with in the company and one goes out and one comes in there is no stamp duty the same as vic companies is that correct.
and do you need as with real estate a qld solicitor to set these companies up as in vic.
This is off the track of kp question but I’m interestedhere to help
hi Qlds007
Does the property in this company have to be in qld to get this exemptionhere to help
Gross
Yes
Cheers Richard
Ph: 07 3720 1888
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http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
What about a little additive in the contract of sale – where it states the name of the purchaser, for example: Mr & Mrs Jones and ‘Nominated Party’ or some such thing. I can’t recall exactly but on one of our purchasing adventures the offer was made in our name (wife and I) but because it was to be underwritten (read guaranteed) by my employer they wanted to be named on the purchase contract so the REA added “ and Nomine” – I think.
Would that not work in Redwings case – No stampduty, taxes or anything. He is simple added at a later stage to the title. Ahh, problem is getting them off the title!!Never mind – the company idea sounds very interesting! You people are truely amazing! I would never have thought of that.
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas Edisonhi Qlds007
yes to property must be in qld.
or yes to allhere to help
KP i read your post again and it appears that there are 3 parts to this strategy.
1. Settlement of land before construction.
2. An option to purchase with a time frame and sunset clause.
3. Liabality of purchaser.
Have you had legal advise or can u give me some more clarity to this please.
Resiwealth – profits r better than wages
I have been away for the last 10 days so have only just seen all the replies…thanks Qld007 for the good suggestion.
While I was away, I did attempt to get an opinion from someone who I thought would be an expert ( solicitor) but to no avail.
There are two parties to the deal.
The local buyer who has first right of refusal to buy a block, which will have a stipulation that they will have to build within 24 months.
(It is still not clear how the developer will enforce this requirement and screen offers to ensure they are ‘local’ buyers.)The other party is the investor, who wants to secure the property, and finance it, and build to either keep and rent out or resell upon completion.
So the problem is one of transfer of ownership to minimise costs such as double stamp duty, etc. and also to find a way for the investor to be able to finance the purchase, when it is not ( initially) in the investors name.
The local buyer can’t/won’t be able to finance the purchase.The company arrangement sound reasonable, albeit at a setup cost of approx $1200 per shelf company, and the potential complication of triggering cgt when the shares are transferred…
Now sounds like I need to speak with an accountant regarding the Pty Ltd arrangement..
In WA you are still able to make an offer on a contract ‘John Doe’ and/or nominee, so it is possible to slot the Pty Ltd in as the nominee purchaser.
This may well work…..Thanks all for the input..
kp
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