RE: Stamp Duty and Land Investment

[Phantom]

I have a friend that is currently purchasing a vacant block of land. His intention is to to build on the land in several years( 3-4) as he is currently working in a remote area.

He has had to pay Qld Stamp duty at the rate of investment property as there is no residence attached to the land therefore negating the primary residence deduction.

However it would appear from researching rulings on the ATO that he is not able to cliam any tax benefits as he is not generating an income of the property.

Can anyone help me with following questions:

1. If the Qld state govt recognise the property as investment, hence the highest rate of stamp duty emposed on the buyer of the vacant land then why can't the buyer claim the stamp duty and all other relevent related costs of the property as tax deductions ( this would also include future interest paid on loan)

2. As the owner has an intention to build the property in several years ( not six months)and therefore make it his priciple residence in the future would my friend be able to challenge the defintion of primary residence (remembering that he us currently working in a remote location).

For your information the price of land is $130000
Stamp duity at investment rate : $3335
Stanp duty at primary place of residence : $890.

Can some body please advise me on how one govt department can recognise the land as an investment when it come to taking money off the buyer ( stamp duty)but whe it comes to giving it back in the form of deductions the other Federal department does the opposite.

 

[MarkB]

Phantom

You've answered your own question.

The ATO is a Commonwealth Government agency - it administers the Tax Act (and a few other bits of legislation).

The Qld Government administers transfers of real property (ie. land) within its borders.

The ATO don't care what the Qld Govt do so long as they get their pound of flesh and vice versa.

It really is as simple as that.

It doesn't make sense, but until State Governments are abolished you will always have situations like this arising.

Unless your friend can build a house and live in it straight away, I doubt he will be able to avoid the Qld state duty (the higher amount).

However, he may be able to get around the ATO problem. Ever heard of agistment? Depending on how big the block is and where it is located he may be able to "rent it out" to a horse owner looking for a nice bit of green grass for their beloved steed.

Or perhaps you could "rent" the land to those living next door to it?

MB