Buying land with choice of house? In whos interest is this?

[4GH1RH]

Saw this today, and thought it was a little odd, and sounds like the developer is fishing for funds which would worry me. How does the stamp duty get reduced - surely you are still paying for a house and land and paying the same total?

QUOTE:
Queensland’s largest residential developer/house builder is building 28 four bedroom air-conditioned homes in a delightful residential area set amidst rain-forest groves on virtually level land. There are six designs on offer. To minimize stamp duty and GST imposts, rather than simply offering these houses as “spec homes” we are asking purchasers and investors to contract to purchase a block of land and have the house of their choice built on that block. A huge saving in costs, (as an example stamp duty payable is only $1794.50 )
{SNIP}

 

[Jamie]

Saw this today, and thought it was a little odd, and sounds like the developer is fishing for funds which would worry me. How does the stamp duty get reduced - surely you are still paying for a house and land and paying the same total?

If you purchase the house and land separately, stamp duty is only levied on the value of the land component. For example, if you purchase a block of land for 100k, and spend 250k building a house, though the end price you pay is 350k, you actually only pay stamp duty on the land component. (Im pretty sure there are some conditions placed on this, so check with your own Office of State Revenue or equivalent).

I guess the vendor is using this as a carrot to dangle in front of prospective purchasers - savings could be around the 12k-15k mark using the numbers I used above.

Jamie.

 

[Tasman]

Hi,
The vendors claims are true in concept, but may not be the best method of purchasing, as other factors need to be considered, such as time taken to build, progress payments and potential for dispute in the building process.

Normally when you purchase a house and land package, there are two contracts, one for the land purchase and one for building the house. These contracts although separate are only offered if you will enter into both contracts. The next step in process is land purchase completes via a property setttlement. At this stage tax (stamp duty) on the property transfer is charged on the value of the contract (land purchase). The building contract executed following this, is merely an improvement to the property, and not part of a property transfer on which tax can be levied.

The advantage to the vendor as against a 'spec' home sale, is they get funds earlier for the land and also progress payments to the builder, meaning the vendor and builder can improve their cashflow, and require less capital.

A 'spec' home (new home built to vendors specification and then sold to a buyer) requires more upfront funds (capital)by vendor, but no hassle with customers over building specification, and usually a better sale price for vendor as customer can inspect a completed product, with consequent less risk compared to house and land package.

cheers