Re-selling a property prior registering ownership

Hi Guys,

Tricky question which I'm seeking an answer for....thank you in advance for your input.

My friend has an opportunity to purchase a property which the vendor is experiencing some hardship and the vendor would rather sell the property to him, rather than the bank selling it to whomever and potentially at a lesser price.

My question in this scenario....could he buy this property, and potentially on-sell this to someone at a higher price, however, as he hasnt technically settled on this, would he need to pay the stamp duty, and assume that he would only need to pay CGT on the higher sale price.

Connection in this transaction - property being sold is his neighbours property and he would like to see his neighbor make some money rather than the bank.

Interested in your vairous thoughts.


Thank you
 
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Pretty straight forward - yes can be done and yes stamp duty would apply and CGT or probably income tax on the profit would apply.
 
Hi Guys,

Tricky question which I'm seeking an answer for....thank you in advance for your input.

My friend has an opportunity to purchase a property which the vendor is experiencing some hardship and the vendor would rather sell the property to him, rather than the bank selling it to whomever and potentially at a lesser price.

My question in this scenario....could he buy this property, and potentially on-sell this to someone at a higher price, however, as he hasnt technically settled on this, would he need to pay the stamp duty, and assume that he would only need to pay CGT on the higher sale price.

Connection in this transaction - property being sold is his neighbours property and he would like to see his neighbor make some money rather than the bank.

Interested in your vairous thoughts.


Thank you

I am not an accountant, others are and hopefully they will comment but just to clarify your thoughts on this.

What is your friend hoping to achieve ?

If the bank was to sell the neighbour up, I believe that they must auction it then take out what is owed to them and give him the surplus (if any)

If your friend is to do a friendly purchase he will need to pay the bank to get them out of the equation, he needs finance plus all the costs involved. Then he needs to market it, I assume using an agent who charges fees, advertising, legals to sell it plus who knows what, new water heater, leaky roof etc.

He then most hope that the market in that area remains active, even talk of an interest rise may kill it stone dead for months.

Then when he sells it he will have to pay tax on the profits :(

Think about it, put all the costs on paper, in an effort to help a friend your friend may cost himself $$$
 
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