All Topics / Creative Investing / Stamp Duty with wraps

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  • Profile photo of magic32magic32
    Participant
    @magic32
    Join Date: 2005
    Post Count: 49
    July 27, 2006 - 1:19 pm

    my understanding with wraps/ vendor finance / lease option / option type purchases has the title changed to the purchaser when the pays off their installments which could be in say 10 or 30 years time. So if the contract is signed today it does not settle until much later.

    If this is so then stamp duty (NSW) on the property is paid in 30 years time and accuring 30 years (minus 3 months of interest on stamp duty)

    One way I can think of is to pay stamp duty before the settlement. Is there any better ways and is the above paragraphs correct.

    Thanks

    Profile photo of snowkiwisnowkiwi
    Participant
    @snowkiwi
    Join Date: 2004
    Post Count: 40
    July 28, 2006 - 2:38 am

    For a wrap, while the settlement is several years down the track, there is still an exchange of purchase contracts. This is the transaction that attracts stamp duty, not the settlement. Each state has it’s own rules about exactly when the stamp duty is payable, but they all revolve around exchange of contracts. You can pretty much assume you’ll have to pay stamp duty pretty early in the piece.

    Now, for a LO on the other hand, there is no exchange of purchase contracts for some time. You’re effectively just on a rental agreement, so stamp duty is not payable until the actual sale contract is exchanged – usually when the purchasor gets finance from a bank a couple of years down the track.

    I don’t quite understand what options you’re trying to improve, but hopefully this clarifies things a bit.

    Craig.

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    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    July 28, 2006 - 6:40 am

    I beleive in NSW stamp duty is payable within 3 months of exchange of contracts for wraps.

    With Lease options there is no exchange yet, so no stamp duty issues until down the track – as Craig has written.

    Terryw
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