As Terry mentions you should have got the Vendor to sign a P & C Option rather than a standard REIQ contract.
In Qld there is no stamp duty on an Option so the net amount between the flipped amount and the original amount would have been yours.
Alternative is if you purchased the property in a Pty Ltd name you could sell the shares in the Company and as long as the Company is not consider "land rich" again their would have been no stamp duty.
We use a combination of both to carry out developments and flips in Qld.
Richard Taylor | Australia's leading private lender
Qlds007 wrote:As Terry mentions you should have got the Vendor to sign a P & C Option rather than a standard REIQ contract.In Qld there is no stamp duty on an Option so the net amount between the flipped amount and the original amount would have been yours.
Alternative is if you purchased the property in a Pty Ltd name you could sell the shares in the Company and as long as the Company is not consider "land rich" again their would have been no stamp duty.
We use a combination of both to carry out developments and flips in Qld.
Hi Richard,
I did not understand about what you mean about selling the shares in the Company. Do you mean buying a property in PTY LTD and then sell the property to someone else and there is no stamp duty on the property?
Thanks.
In some states (or all?) it is possible to transfer shares in a company without stamp duty, unless the company is land rich. ie holding more than a certain value of land. in NSW this limit is about $1mil.
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
Eternit
It is very simple you may the property in the name of ABC Pty Ltd a newly established Company with a 3 month settlement date.
After a week you find a buyer for the property and rather than redo the purchase contract merely do a Share Transfer and the buyer buy the shares in ABC Pty Ltd. As long as the Company is not considered Land Rich there is no stamp duty payable by you on the transaction. You just need to check you State for the restrictions on Land Rich Companies.
Richard Taylor | Australia's leading private lender
But, one drawback is that a company does not receive the 50% reduction in CGT for assets held more than 12 months.
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
But, one drawback is that a company does not receive the 50% reduction in CGT for assets held more than 12 months
Absolutely correct but not applicable if you are looking at doing a flip.Richard Taylor | Australia's leading private lender
Hi Richard
That's true, but the new buyer also has to be ok with purchasing the house in the company – though they could always purchase their shares in the company using a discretionary trust.
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
Terry
Totally agree. In most cases i have found that the flips I have done have been onsold to other developers who have gone on to develop the site or in some cases flip it again (Yes the Nundah Bowls Club which we flipped was subsequently onsold twice more before the end developer built 55 units on it) so the CGT concession has not been a consideration but you are totally correct for the mum and dad investor.
Richard Taylor | Australia's leading private lender
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