Advice on Flips

T

timwr

Hi folks,

I have found a property which is possibly undervalued and so I'm thinking of flipping it. I have 2 questions I'm hoping you can can help me with.

- Is Stamp Duty payable twice?

- I'm certain I can flip the property however, to be cautious, I know I'll have to arrange a mortgage in case the property cannot be flipped. Do I just cancel the loan arrangements with the bank on the day of settlement and pay the application fee or is there any easier way?

Thanks
 
Timwr,

The simple answer is YES. Stamp duty is probably payable twice, though you only pay it for your purchase, the second buyer pays it on their purchase. Don't forget CGT may be payable on the place and also don't forget you are likely to also have some sales costs - even if selling again privately (lawyers' fees if nothing else).

In regards cancelling the mortgage, this is likely to vary depending on the mortgage provider - you need to shop around. A mortgage broker won't help you except out of the goodness of their heart (and hope for future business) as they likely wouldn't get any fee out of a loan that you cancel this way (or it would become a great scam for brokers).

Here's a thought for you - why flip?

Why not simply buy the place at the undervalued price, have it revalued at the market price & pull out the extra equity in a LOC for the next place? Then rent it out, hold onto it for awhile & pull some more equity out..

Cheers,

Aceyducey
 
nicely said acey! :)

Tim...

The main thing to remember, as Acey said, but I wanted to reiterate, is make sure you allow for ALL the costs.

We have just done a flip and the costs were (But you may have others!):

Purchase price,
Conveyancing on purchase,
Stamp duty on purchase,
?possibly mortgage fees, depending on your resale time,
conveyancing on sale,
Capital Gains Tax,
accountant fees on advice (if required)
possible interest fees if you can't settle simultaneously
possible surveying, building insp, pest inspec fees
agent fees on resale...

Again, there may be others, this is just a suggested list..

All I'm saying is, if you are going to do this, make sure you take it all into account!

asy :D
 
perhaps a better question is :

How can I avoid paying stamp duty on a flip.....

Flipping isnt my area of interest but from what Ive read there is a particular lease option strategy to get around it... Ive also read that this loophole has been closed in a certain state.....

Any flippers want to clarify ?
 
I thought that there was a way- the flipperputs their own name at exchange- adding "or nominee"- enabling the flipper to change the name at settlement- and so never actually owns the property.
 
Nope - the old and/or nominee trick doesn't cut it anymore :)

And purchasing an option on the property can also include double stamp duty if not careful :)

Cheers,

Aceyducey
 
ahhh, for the good old days of flipping. Everything is so regulated now, makes ones creative ability feel a tad sorry. *polishes old flipping badge*
 
The Wife,

I see it as an opportunity to become even more creative :)

If it stayed like the good old days, by now many more people would have caught on to the tricks of the trade & they wouldn't deliver so much value.

The moving target of regulation keeps the shonkies on the backfoot, the uncreative out of the game & the creative ahead :)

Cheers,

Aceyducey
 
Hey TW,

Good to see you dropping by!

A pity Sim hasn't linked your current post history back to the old forum, like he promised :D
 
GeoffW you gorgeous thing!
How are you?
Hows the family?
I must come by and say hello, it’s been ages!
Love to the girls, let’s catch up soon.
 
goodness, Asy has my home phone number, what is left to fear? *hugs Asy close*

Count me in Geoff, I will email Mr Ed. Look forward to seeing you again.
 
Originally posted by geoffw
I thought that there was a way- the flipperputs their own name at exchange- adding "or nominee"- enabling the flipper to change the name at settlement- and so never actually owns the property.
Click to expand...

G'Day all,

adding ......and/or nominee after your name on the contract and then substituting another buyer is fine as long as none of the contract details change, that means primarily, PRICE.

As the main objective to flipping a property is to make some sovereigns, then as the price changes, stamp duty applies to both contracts as there is a new contract from the flipper to the flippee at a higher price.

Of course there is ways around this, but none that I know that come within the parameters of what is regarded as LEGAL.

P.S. welcome back TW

regards
 
Yes... you can still flip... (legally in qld)

Well...


Not bloody flipping again... ;)

Yes... you can still buy in your own name and transfer ownership and not pay stamp duty.... (and you don't have to put and/or nominee... and yes it is legal).

In additon, I do not recommend a "sign the contract and flip" approach to anyone... (And i'm not going to talk about it in a public forum... find a lawyer and learn the ropes... if you really want to do it)


Ross Sondergeld
Ross for Property
 
Re: Yes... you can still flip... (legally in qld)

Originally posted by Ross Sondergeld

Yes... you can still buy in your own name and transfer ownership and not pay stamp duty.... (and you don't have to put and/or nominee... and yes it is legal).
Click to expand...

Ross,

This must be a QLD thing then - it's certainly not legal here in NSW or the ACT.

Anyone know if it's legal in any other states (NT maybe)?

Cheers,

Aceyducey
 
Hi Aceyducey,



You said, "This must be a QLD thing then - it's certainly not legal here in NSW or the ACT. Anyone know if it's legal in any other states (NT maybe)?"


Sorry.... I'm in queensland and it is possible.

But I don't have a clue about any other state....




Ross for Property
 
Hi Aceyducey

Spoke to a developer friend of mine here in Sydney and he tells me that you can actually change the name on the contract and he does it when he needs to. I suppose it depends on who you talk to.
 
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