Hi there,
I have obtained all of the relevant certification and am about to undertake a transaction via an installment contract. I have one final question that I am struggling to find the answer to that Paul or Richard might know the answer to.
If I purchase a property with the intent to sell via an installment contract and pay the stamp duty on the price I intend to sell the property for under an IC, does that void the purchaser from having to pay stamp duty when the property is transferred into their name?
I Have found the following ruling from the NSW OSR (DUT 10)
8. A transfer to a person who is not the purchaser named in the agreement will be considered to
be in conformity with the agreement in the following circumstances.(e) An agreement followed by a further agreement under which the original purchaser is
vendor, with the transfer from the original vendor to the ultimate purchaser. If ad valorem
duty has been paid on the second agreement (the subsale), duty of $2 will be payable on
the transfer.How have you dealt with this in your prior dealings?
Liam…
Hi Liam
Dont think you are fully understanding the transaction.
You as the original purchaser pay Stamp Duty based on your purchase price and then your purchaser pays his or her duty at their applicable rate based on the purchase price of the installment contract (they maybe entitled to FHB concessions / Grants etc.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You will have to read the Duties Act NSW
I've read it but not with an eye to considering installment contracts.
I can't see how duty wouldn't apply twice as there are 2 transactions and both would be dutiable transactions.
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
Thanks Terry & Richard,
I would really suspect that the duty would be applicable to both transactions, however finding that ruling on the NSW OSR website has now cast a doubt in my mind.
Liam..
Hi Liam
As we use this model all the time with our JV Property Partners business, I can confirm our experience is the same as Richard and Terry outline above.
When you purchase the property, you pay Stamp Duty. For the on-selling of the property, NSW requires Stamp Duty to be paid within 90 days of 'exchange of contracts'. As you 'exchange contracts' prior to the VF buyer taking possession, you are required to pay Stamp Duty within 90 days of that 'exchange'.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Liam
Usually the name on the transfer will be the same as the name on the contract. This is what is referred to by that phrase "in conformity with the agreement". If a husband signs in his name only and then the transfer is for husband and wife then this would be deemed to be in conformity with the agreement and only a nominal extra amount of stamp duty imposed.
In your case you would be paying the property and then onselling with a separate contract for the new purchaser who would probably not be related. So this concession probably wouldn't be available.
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
Thanks for your advice Terry, Paul and Richard,
Much appreciated.
Liam..
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