1 way to bypass stamp duty
- Thread starter rodimus
- Start date
I asked this question before, there appears to be "land rich" provisions in act that means if the company/trust has significant property assets then the asset is deamed to have transfered => stamp duty is due.
There was a suggestion that a multilayer company trust structure could be used. ie transfer the shares of a company that owns another company that is a trustee of properties.
There was a suggestion that a multilayer company trust structure could be used. ie transfer the shares of a company that owns another company that is a trustee of properties.
rodimus said:
Yes if it's below the land rich threshold, but you would then need to be sure that the company was a cleanskin and hadn't done anything bad that you'd inherit. Also you'd want to obtain suitable warranties from the vendor and thereby you'd be keeping a line of attack open to the vendor (which they will probably seek to cap or sunset (ie have expire)). I suspect that if you were going to do this the legals would negate any stamp duty advantage.
When you buy torrens title property there is legislation which means that (apart from where there's fraud) you get ownership of the property unable to be attacked by anyone else. That's a very powerful thing which you shouldn't give away whilst trying to save a bit of stamp duty - it's one of the law's few immunity tokens
I'm sure there's been threads on this before...
rodimus said:
Used to be in NSW - now $2m. But they've also dropped to percentage of assets down to 60% from 80% as the "land rich test".
Different in other states. eg. Qld $1m, Tassie was $500k last time I looked - but may have changed...
There are also aggregation rules - and you wouldn't be in a position to know who was associated with the vendor and what they owned - and I wouldn't rely on a warranty about that without some security or a bank guarantee/unconditional letter of credit !
Land rich is a very complex area - for example, if the vendor unbeknownst to you were to sign a contract to buy another property before you settled on your purchase from it, both your prospective purchase and the vendor's prospective purchase could be aggregated to make a company which wasn't otherwise land rich, land rich at that point and whammo - duty payable.
Unless you're buying in the $10m+ category I wouldn't go there. If you are good luck to you!
Cheers
N.
There was a thread not so long ago about someone asking how you can pay $0 stamp duty when buying aproperty. This thread jolted my memory. I remember reading that you can avoid stamp duty if you buy the units (from a unit trust) that owns the property.
At the time I remember looking into the pros and cons.
This only works IF the seller had originally purchase the property in a unit trust AND the buyer is willing to buy the units and inherit the "unit trust" structure.
This only works with a proper unit trust NOT a HDT.
This may be a disadvantage to the buyer in the long term especially if the property is purchased as a PPOR since the unit trust will have to pay CGT.
The buyer could tell the seller that they are not interested in the stucture and just want to by the property outright which wuld also work. The unit trust would simply be "destroyed".
This scenario would work best if it was an investor to investor transaction, but I think there are still a few disadvantages but can not remember them all exactly.
Having said that, if you are interested in buying a multi-million dollar property as an investement and the seller has already set up the unit trust strucutre, I think it would save you "a lot" in stamp duty.
Nom
EDIT: This is the thread I mentioned at the beginning : http://www.somersoft.com/forums/showthread.php?t=18054
Nigel gives a good explenation.
At the time I remember looking into the pros and cons.
This only works IF the seller had originally purchase the property in a unit trust AND the buyer is willing to buy the units and inherit the "unit trust" structure.
This only works with a proper unit trust NOT a HDT.
This may be a disadvantage to the buyer in the long term especially if the property is purchased as a PPOR since the unit trust will have to pay CGT.
The buyer could tell the seller that they are not interested in the stucture and just want to by the property outright which wuld also work. The unit trust would simply be "destroyed".
This scenario would work best if it was an investor to investor transaction, but I think there are still a few disadvantages but can not remember them all exactly.
Having said that, if you are interested in buying a multi-million dollar property as an investement and the seller has already set up the unit trust strucutre, I think it would save you "a lot" in stamp duty.
Nom
EDIT: This is the thread I mentioned at the beginning : http://www.somersoft.com/forums/showthread.php?t=18054
Nigel gives a good explenation.
Nominees said:
OK so I am not able to buy a $1mil property today (bugger) and it may therefore not be worth going down this path. But let us go forward in time, in my case I have a HDT and the whole purpose of this is to ensure future generations can benefit. So if today I purchase properties in a unit trust that is owned by the HDT, would that not, after the 80years have expired give my siblings the opportunity to move the property from the original HDT that is about to be wound up into the new HDT(or whatever mechanism is around then) without triggering a CGT event? of course it is all the same appointer so there should be no risks.
Now I know we don't know what the 'conditions' will be like at that time but is it worth consideration to set it up right today to assist in the future?Norman
From what you explained the HDT does not own the property. The unit trust does. The HDT only has units.
So if the HDT bought the 300,000 units at $1 each (say) it can then sell these units to another HDT for the same amount and not trigger CGT because no gain was realised on the sale of *units*.
In this case the unit trust still owns the property it is only the *units* that change hands.
Before doing anything check with a lawyer (BTW I am not a lawyer).
Nom
Nominees said:
Nom thanks,
yes so what this might be is the mechanism that I have been looking for, that is what happens in 80 years time when the trust has to be wound up, my children etc will have to pay a bunch of CGT before they get to divvy up the loot. But if set up properly now, like suggested, the trust sells units for some small amount of money to another trust (owned by who
) and then it will own very little on year 80 and will just disappear and the "family trust" will have another name.Norman
