Reducing Stamp Duty
- Thread starter AndrewS
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Reply: 1
From: Michael G
Hi,
One strategy that I know of, is splitting the contract.
Stamp duty is payable on land, but if purchased with a house, its paid on house and land.
When builders advertise house and land packages, where you buy a block and then select a home, paint, etc. You can have the house and land as two seperate contracts.
In this case, you would only pay stamp duty on the cost of the land, not the combined total.
When I attended a HK seminar, they explained this can be done with off the plan unit purchasers too, where you only pay duty on the cost of the land unit allocation. With such purchases land content can be less than 30% of the purchase price.
This requires getting the developer to agree to drawing up two seperate contracts one for the purchase of the land and another for the construction of the unit.
As with anything regarding tax, its determined on intent and cannot be viewed as tax avoidance, only tax minimisation.
I'm not sure if this could be done with 2nd hand homes, but I'm happy to be proved wrong.
By the way - please seek an open minded law abiding solicitor.
Michael G.
From: Michael G
Hi,
One strategy that I know of, is splitting the contract.
Stamp duty is payable on land, but if purchased with a house, its paid on house and land.
When builders advertise house and land packages, where you buy a block and then select a home, paint, etc. You can have the house and land as two seperate contracts.
In this case, you would only pay stamp duty on the cost of the land, not the combined total.
When I attended a HK seminar, they explained this can be done with off the plan unit purchasers too, where you only pay duty on the cost of the land unit allocation. With such purchases land content can be less than 30% of the purchase price.
This requires getting the developer to agree to drawing up two seperate contracts one for the purchase of the land and another for the construction of the unit.
As with anything regarding tax, its determined on intent and cannot be viewed as tax avoidance, only tax minimisation.
I'm not sure if this could be done with 2nd hand homes, but I'm happy to be proved wrong.
By the way - please seek an open minded law abiding solicitor.
Michael G.
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Reply: 1.1
From: G V
Hi Michael,
Does the builder has any disadvantage in splitting the contract or is it only inconvenience. Is it applicable in all states or does it vary from state to state.
From: G V
Hi Michael,
Does the builder has any disadvantage in splitting the contract or is it only inconvenience. Is it applicable in all states or does it vary from state to state.
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Reply: 2
From: Dale Gatherum-Goss
Hi Andrew!
I'm not entirely sure that it is still possible, but . . . .
A number of years ago now, when I prepared tax returns for some of the wealthiest people in the country, we used a trick where there was no written contract to buy the property and this meant that there was only a nominal stamp duty paid of a couple of dollars.
This is in Victoria and the agreement to purchase the property was a verbal contract witnessed by solicitors to protect the innocent or guilty.
The crucial issue was that stamp duty applied to the written contract and not the actual transfer of land.
This tactic is not for everyone and may indeed not be available any more. Perhaps a chat with your solicitor might be worthwhile.
I hope that this helps and have fun
Dale
From: Dale Gatherum-Goss
Hi Andrew!
I'm not entirely sure that it is still possible, but . . . .
A number of years ago now, when I prepared tax returns for some of the wealthiest people in the country, we used a trick where there was no written contract to buy the property and this meant that there was only a nominal stamp duty paid of a couple of dollars.
This is in Victoria and the agreement to purchase the property was a verbal contract witnessed by solicitors to protect the innocent or guilty.
The crucial issue was that stamp duty applied to the written contract and not the actual transfer of land.
This tactic is not for everyone and may indeed not be available any more. Perhaps a chat with your solicitor might be worthwhile.
I hope that this helps and have fun
Dale
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Reply: 2.1
From: Waverly Bay
It used to be the case that no instrument in writing transferring the interest in property = no stamp duty !
This was called transferring property via a claytons contract (ie transferring the property with say a written offer but verbal acceptance). In most states, anti avoidance provisions were introduced into most state' stamp duty legislation to force parties attempting a claytons contract to bring into existence a dutiable document. I am not up to speed on the latest position in VIC although for most of the 90's claytons contract transfers worked.
In NSW, these anti avoidance provisions were introduced in mid 80's, although i am aware of people on this forum using these method to avoid NSW conveyance stamp duty as late as 1998 !!! Ssssshhhhhhhh. Did i say "avoid"? Stamp duties legislation by and large don't have general anti avoidance provisions in the same scope and breath of say the tax act.
On the above postee's suggestion of separating contracts - again, most stamp duties legislation operate to "aggregate" separate contracts. It was - like claytons contracts - a very old trick that State revenue offices disliked ! So be careful.
Oh...when getting stamp duty advice - don't just get ANY solicitor. Like tax, stamp duty is quite a specialised area of practice, and as such, quality and depth of knowledge will vary enormously between solicitors/accountants.
Cheers
Waverly
From: Waverly Bay
It used to be the case that no instrument in writing transferring the interest in property = no stamp duty !
This was called transferring property via a claytons contract (ie transferring the property with say a written offer but verbal acceptance). In most states, anti avoidance provisions were introduced into most state' stamp duty legislation to force parties attempting a claytons contract to bring into existence a dutiable document. I am not up to speed on the latest position in VIC although for most of the 90's claytons contract transfers worked.
In NSW, these anti avoidance provisions were introduced in mid 80's, although i am aware of people on this forum using these method to avoid NSW conveyance stamp duty as late as 1998 !!! Ssssshhhhhhhh. Did i say "avoid"? Stamp duties legislation by and large don't have general anti avoidance provisions in the same scope and breath of say the tax act.
On the above postee's suggestion of separating contracts - again, most stamp duties legislation operate to "aggregate" separate contracts. It was - like claytons contracts - a very old trick that State revenue offices disliked ! So be careful.
Oh...when getting stamp duty advice - don't just get ANY solicitor. Like tax, stamp duty is quite a specialised area of practice, and as such, quality and depth of knowledge will vary enormously between solicitors/accountants.
Cheers
Waverly
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Reply: 2.1.1
From: Even Steven
Something I learnt at university - tax avoidance is prudent, tax evasion is illegal.
From: Even Steven
Something I learnt at university - tax avoidance is prudent, tax evasion is illegal.
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Reply: 1.2
From: Greg Mitchell
Another strategy that I know of,
is splitting the contract, between the agent fees and the vendor payment.
Agent fees are only fee for service and not part of the true cost of the property.
When the vendor is paying $30k to the agent the difference in stamp duty soon adds up (in your favor)
Haven't done it myself , but I know some one who did it.
GregM
From: Greg Mitchell
Another strategy that I know of,
is splitting the contract, between the agent fees and the vendor payment.
Agent fees are only fee for service and not part of the true cost of the property.
When the vendor is paying $30k to the agent the difference in stamp duty soon adds up (in your favor)
Haven't done it myself , but I know some one who did it.
GregM
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Reply: 2.1.1.1
From: The Wife
eeeek!,
Dont you mean tax minimisation is prudent, avoidance IS illegal.
I think you will find ATO is not fond of the word avoidance, and they like to slam dunk people who do it.
TW
~Life is a daring adventure, or nothing at all~
From: The Wife
eeeek!,
Dont you mean tax minimisation is prudent, avoidance IS illegal.
I think you will find ATO is not fond of the word avoidance, and they like to slam dunk people who do it.
TW
~Life is a daring adventure, or nothing at all~
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Reply: 2.1.1.1.1
From: Dale Gatherum-Goss
Hi TW!
Actually, tax avoidance is legal and is accepted by the tax office. However, tax evasion is something that they are not quite so friendly with.
Tax avoidance is using the laws available to minimise your taxes to every extent possible.
Tax evasion is to break those laws to gain the same result.
Have fun!
Dale
From: Dale Gatherum-Goss
Hi TW!
Actually, tax avoidance is legal and is accepted by the tax office. However, tax evasion is something that they are not quite so friendly with.
Tax avoidance is using the laws available to minimise your taxes to every extent possible.
Tax evasion is to break those laws to gain the same result.
Have fun!
Dale
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stop digest over xmas
Reply: 2.1.1.1.1.1
From: Ricky Harriss
Can anyone please tell me how to stop the property forum from being e-mailed
to me.
I've looked under more & profile but can't for the life work it out.
Contact off lis
t
Thanks Ricky
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Reply: 2.1.1.1.1.1
From: Ricky Harriss
Can anyone please tell me how to stop the property forum from being e-mailed
to me.
I've looked under more & profile but can't for the life work it out.
Contact off lis
t
Thanks Ricky
IMPORTANT NOTICE:
This e-mail and any attachment to it is intended only to be read or used by
the named addressee. It is confidential and may contain legally privileged
information. No confidentiality or privilege is waived or lost by any
mistaken transmission to you. If you receive this e-mail in error, please
immediately delete it from your system and notify the sender. You must not
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