All Topics / Help Needed! / Stamp Duty (Interesting Scenario)

Viewing 17 posts - 1 through 17 (of 17 total)
  • Profile photo of hsingh10hsingh10
    Member
    @hsingh10
    Join Date: 2009
    Post Count: 21

    Good Morning Everyone,

    I have an interesting scenario. I am in the process of purchasing a property where the Seller has agreed to pay the Stamp Duty :-). My query is whether I can claim the Stamp Duty as an Expense in my Tax return. Any ideassuggestions would be really appreciated.

    Thanks Heaps Everyone,

    Himanshu

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    You cannot claim stamp duty on your tax return anyway.  It only comes into play if and when you sell the property, to determine the capital gain.  In that regard, it doesn't matter whether you spend your few extra thousand on a higher property price or on the stamp duty.  All that matters is the total of the dwelling cost plus the stamp duty.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Josh AthertonJosh Atherton
    Member
    @josh-atherton
    Join Date: 2011
    Post Count: 269

    exactly what JacM has said.

    it is a capital expense and cannot be claimed until the property is sold. However if you have not paid it yourself then you cannot claim for it. The seller will make this claim when he files his tax return once the property is sold.

    May I ask why they are paying your stamp duty? isnt that the situation of a desperate vendor selling a property that no one wants?

    Profile photo of hsingh10hsingh10
    Member
    @hsingh10
    Join Date: 2009
    Post Count: 21

    Thanks JACM and Portfolio Pl for your response and clarification. Portfolio Pl, it is a desperate sell but I believe that it is worthwhile based on our due deligence. Basically, the property can be sub-divided and is located close to Uni and the CBD. I hope that our due deligence pays off.

    Profile photo of naughtyjnaughtyj
    Participant
    @naughtyj
    Join Date: 2011
    Post Count: 17

    Actually, if the property is located in the ACT (Canberra), I believe the stamp duty is deductable in the first year of purchase, so depending on where hsingh10 is purchasing the property, it might be worth talking to his tax person about.

    All I could find was a Defense Housing Brochure to confirm this, but both IPs we've bought, the accountant has managed to get it deducted without objection from the ATO.

    From the brochure:

    Property investors are also attracted to Canberra because of its taxation benefits. When you buy an investment property in the ACT, you may be able to claim stamp duty as a 100% tax deduction in the first year*. That equates to a $20,500 deduction where the purchase price is $500,000!

    The Australian Taxation Office produces a number of publications and guides on taxation related matters. Most are available on their website or by calling 132 861.

    Why is this deduction applicable to ACT properties?

    The ACT has a leasehold system of land ownership, which means you don't purchase property and land outright, you obtain a lease over the land for 99 years (Note: to date, expired leases have been renewed by the Government for a further 99 years). This means acquisition costs, such as stamp duty and legal fees, paid in conjunction with the purchase of an investment property may be claimed, in full, as a tax deduction.

    © Defence Housing Australia 2009 Page 1 of 2

    Profile photo of hsingh10hsingh10
    Member
    @hsingh10
    Join Date: 2009
    Post Count: 21

    Thanks naughtyj for the information. I am in QLD. I believe based on the detail information provided, since the land here is owned completely, it would be capital expense. Cheers. HS.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,850

    why not just get a price reduction equal to the stamp duty?

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539
    Scott No Mates wrote:
    why not just get a price reduction equal to the stamp duty?

    I agree.  The net effect of it is that you'd have to come up with LESS money to get into the deal.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    naughtyj wrote:

    Actually, if the property is located in the ACT (Canberra), I believe the stamp duty is deductable in the first year of purchase, so depending on where hsingh10 is purchasing the property, it might be worth talking to his tax person about.

     

    Correct :)

    It's one of the perks of purchasing an investment property in Canberra. We also have pretty decent growth and the yields aren't too bad either….and the vacancy rate is close to zero.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    mattnz
    Participant
    @mattnz
    Join Date: 2007
    Post Count: 574

    Actually, given that stamp duty is a 100% cash expense,whereas you could borrow 80-90% of the purchase price, this approach makes alot of sense, as long as the bank valuation supports the full price.

    It would also make sense in a market like Melbourne’s western suburbs, where alot of the competition would be new housing stock.By offering to pay the purchaser’s stamp duty, you are seen as being on a more level playing field.

    Profile photo of hsingh10hsingh10
    Member
    @hsingh10
    Join Date: 2009
    Post Count: 21

    Thanks everyone for your inputs. We agreed on the Seller paying the Stamp Duty as we were running short on the Cash (Deposit etc) to put in. If we reduced the price, still the bank would only give us 95% of the Purchase Price. So, we decided to go for this (which was actually offered by the seller). I believe it is win-win for all. 

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470

    Heres a question for the lending gurus- Is there a legal requirement to disclose to the lender that the vendor is paying the stamp duty?

    Cheers,
    Luke

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Yes, it should be disclosed.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of luke86luke86
    Participant
    @luke86
    Join Date: 2010
    Post Count: 470

    If that is the case then I would say that the highest valuation the lender will use is the purchase price minus the stamp duty.

    Cheers,
    Luke

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I think it would depend on a number of things such as if they are aware of it (they usually don't read broker comments!) and the LVR.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of colinnewlandcolinnewland
    Participant
    @colinnewland
    Join Date: 2006
    Post Count: 128

    Try giving him 2 checques on settlement, clearly showing what each cheque is for as part of the total price. You 'may' then be able to claim the stamp duty as a legit tax expense.

    Profile photo of markh3084markh3084
    Participant
    @markh3084
    Join Date: 2010
    Post Count: 43

    Hello,

    can you point me to the ATO ruling on the stamp duty concession for Canberra IPs? I purchased one last year and my tax agent is telling me I am unable to claim stamp duty. Any help would be appreciated

    thanks

    Mark

Viewing 17 posts - 1 through 17 (of 17 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.