Asking $550 - Offer $510 then $40 in cash
- Thread starter maadha
- Start date
Consider from a practial point of view...
How would the contract be written so that the vendor is guaranteed to get the $40k? Are you willing to give them a 10% deposit and another $40k cash when signing the contract?
Also what's the benefit to the purchaser? You don't get the stamp duty exemptions for first home buyers in NSW if the contracat is over $500k, so you might save a few hundred on stamp duty. Not worth having the state revenue office come after you if they find out you're trying to dodge paying them.
How would the contract be written so that the vendor is guaranteed to get the $40k? Are you willing to give them a 10% deposit and another $40k cash when signing the contract?
Also what's the benefit to the purchaser? You don't get the stamp duty exemptions for first home buyers in NSW if the contracat is over $500k, so you might save a few hundred on stamp duty. Not worth having the state revenue office come after you if they find out you're trying to dodge paying them.
Thanks for the advice.
As soon as I heard this I was a bit sus as this just sounds dodgy. Thought i'd ask as part of my purchasing education.
PT_Bear: There are still exemptions for stamp duty in NSW between $500k and $600k although it is on a sliding scale rather than the full exemption.
http://www.osr.nsw.gov.au/lib/doc/factsheets/fs_fhb1.pdf
Thanks again for the feedback.
As soon as I heard this I was a bit sus as this just sounds dodgy. Thought i'd ask as part of my purchasing education.
PT_Bear: There are still exemptions for stamp duty in NSW between $500k and $600k although it is on a sliding scale rather than the full exemption.
http://www.osr.nsw.gov.au/lib/doc/factsheets/fs_fhb1.pdf
Thanks again for the feedback.
that's quite an illogical way- as mentioned by the post.
illegal as it is the only time i believe this would occur is like a parent decides to sell a place to his son or daughter something btw those lines.
Why would you devalue your own house? Your house will be recorded as being worth 510 K. It will be worth 40k less than what you actually paid when you take a loan . Throw away 32k equity for a few $, duh, huge opportunity cost. You could control another 150k of assets with that, oh another 20+k compounding every year lost. Your stamp duty savings probably wont even be as much as your income tax savings if you paid the extra 40k. Got a neighbor like that always disputes his rates valuation and lowers his property value just so he can pay a few dollars less rates.
Does happen though. Revenue would / should go over all tranfers at the 500k mark in nsw especially if no agent is involved.
Good point Buster difficult to get revaled up with Valuer looking at the sales history of the property, they would be swayed by that as part of their analysis.
Good point Buster difficult to get revaled up with Valuer looking at the sales history of the property, they would be swayed by that as part of their analysis.
Ilegality aside, heard of it happening a number of times in my travels and some of those very recently.
As a seller, you couldn't bank the funds, so where would you keep it? Under the mattress? Its only an advantage for the buyer looking to get rid of 'black' money.
As a seller, you couldn't bank the funds, so where would you keep it? Under the mattress? Its only an advantage for the buyer looking to get rid of 'black' money.
Story related to me recently, not directly related to property but same concept.
A trusting Cambodian guy selling a business struck a deal $500k with $100k of it to be cash to be paid at settlement. Settlement comes and buyer settles without the cash and makes up some excuse for not having it. Come over to our place and you can ppick it up, oh sorry my mother forgot to pick it up etc. He never received the $100k and not a leg to stand on.
Cheers
A trusting Cambodian guy selling a business struck a deal $500k with $100k of it to be cash to be paid at settlement. Settlement comes and buyer settles without the cash and makes up some excuse for not having it. Come over to our place and you can ppick it up, oh sorry my mother forgot to pick it up etc. He never received the $100k and not a leg to stand on.
Cheers
it happens a lot as is highly illegal.
investor has property worth $800k
is approached to sell for $600k contract and $200k cash , investor thinks great will mean no/little capital gains tax
purchaser hands over $200k cash and then completes the settlement as normal based on $600k contract
property sold later on for say $1m, cash is from capital gains and in effect $200k has been 'cleaned'
drug dealers would be prime candidates for it
also certain groups of people do it , it happens a lot in caulfield and st kilda west known as the ******* Bank, they are quite open about it, they just approach agents or owners (better when off market) and say 'how about cash and contract, this group only tend to do 10% or so compared to 20-30% like the other types.
as an owner in the area it stuffs up your val, it robs the SRO of stamp duty and ATO of capital gain tax.
investor has property worth $800k
is approached to sell for $600k contract and $200k cash , investor thinks great will mean no/little capital gains tax
purchaser hands over $200k cash and then completes the settlement as normal based on $600k contract
property sold later on for say $1m, cash is from capital gains and in effect $200k has been 'cleaned'
drug dealers would be prime candidates for it
also certain groups of people do it , it happens a lot in caulfield and st kilda west known as the ******* Bank, they are quite open about it, they just approach agents or owners (better when off market) and say 'how about cash and contract, this group only tend to do 10% or so compared to 20-30% like the other types.
as an owner in the area it stuffs up your val, it robs the SRO of stamp duty and ATO of capital gain tax.
No CGT for a PPOR. They wouldn't buy an IP, they make more money with their other activities.
even if bought as IP says the pay capital gains but it cleans the money as they can show where it came fgrom and can now go in bank
often they buy devleopoment sites and can do dodgy building conracts etc so project basically makes no money on paper and then on sale the cash is clean
also use a young family member to buy as ppor
buy as his first home , he lives there rent free and when sold they might sling him $20k or something
lots of tactics, ato have caught quite a few doing this
I have done something along these lines in the past although not for the same reasons.
Sold my PPOR to my brother 18 months before i moved out(was building new PPOR at the time).
Sold to him at the value at the start of the 18 months - verbal though- no written contracts at this point). He paid me 50% of the agreed sale price.
Why?
Me:
Provided me rent free accom and reduced bridging finance.
Less stuffing around having to tidy up.
Brother:
locked in buy price, and discounted due to no agents fees.
Moved out, settled remainder at end of 18 months.
The point of writing this.
State rev office in VIC charged him stamp duty at about 12% above contracted price. Writing an amount on a contract doesnt necessarily mean that is the stamp duty payable. If it is low vs area/valuation they will come after you for more. Written contracts were done on 45 days settlement when we were coming close to settlement day.
Death and taxes...........
Sold my PPOR to my brother 18 months before i moved out(was building new PPOR at the time).
Sold to him at the value at the start of the 18 months - verbal though- no written contracts at this point). He paid me 50% of the agreed sale price.
Why?
Me:
Provided me rent free accom and reduced bridging finance.
Less stuffing around having to tidy up.
Brother:
locked in buy price, and discounted due to no agents fees.
Moved out, settled remainder at end of 18 months.
The point of writing this.
State rev office in VIC charged him stamp duty at about 12% above contracted price. Writing an amount on a contract doesnt necessarily mean that is the stamp duty payable. If it is low vs area/valuation they will come after you for more. Written contracts were done on 45 days settlement when we were coming close to settlement day.
Death and taxes...........
I also wondered this, I'm a car salesman and we quite often do this to get people approved for finance (Ie if a 20% deposit is required).
Whats the legalities on this scenario?
