Selling to family
- Thread starter Success
- Start date
Hello Success
The OSR is a good place to start as they will tell you what they want to see. This is the transfer of registered proprietor and is a Transfer of Land, not just a change of names.
This is called an Advantageous or Favourable Purchase, whether the transaction is at full market value or at any agreed amount eg $1.
In Victoria (I am doing the finance for a similar transaction at the moment) there is no Contract required, just a completed Registered Proprietor Transfer of Land. The Consideration (Price) is entered into the Transfer in the usual way, however we must render unto Caesar the things which are Caesar’s, and Stamp Duty must be paid on the Market Value of the property.
The purchaser does not need to have a Valuation done, but must provide a professional opinion of value eg a Letter from an Estate Agent and Stamp duty will be levied on that figure.
The actual price paid forms the base for the purchase for the future calculation of tax on Capital Gain. The ATO will assess the transaction at market value to the vendor, and the price paid for the purchaser. The ATO does not need to see any letters, but the transaction must be supported with evidence of comparable sales or other information to support the declared market value.
Lenders all have different policies regarding Advantageous Purchases. As a general rule of thumb, they will allow the Consideration plus Reasonable Costs to be borrowed. For some lenders, this means up to 105% of the Consideration, for other lenders there is no limit provided that the transaction is within their usual LVR and other guidelines.
Some lenders will not allow ‘cash out’ for at least six months after the transaction, others will allow cash out at time of settlement
So you have a number of points to consider
The agreed Consideration for the Transfer
The payment of Stamp Duty on the Market Value
The declaration to the ATO regarding the disposal of the Asset
The application to a Lender for finance (if any)to assist with the purchase of the property
Other than that, good luck and hope it all goes well
Cheers
Kristine
The OSR is a good place to start as they will tell you what they want to see. This is the transfer of registered proprietor and is a Transfer of Land, not just a change of names.
This is called an Advantageous or Favourable Purchase, whether the transaction is at full market value or at any agreed amount eg $1.
In Victoria (I am doing the finance for a similar transaction at the moment) there is no Contract required, just a completed Registered Proprietor Transfer of Land. The Consideration (Price) is entered into the Transfer in the usual way, however we must render unto Caesar the things which are Caesar’s, and Stamp Duty must be paid on the Market Value of the property.
The purchaser does not need to have a Valuation done, but must provide a professional opinion of value eg a Letter from an Estate Agent and Stamp duty will be levied on that figure.
The actual price paid forms the base for the purchase for the future calculation of tax on Capital Gain. The ATO will assess the transaction at market value to the vendor, and the price paid for the purchaser. The ATO does not need to see any letters, but the transaction must be supported with evidence of comparable sales or other information to support the declared market value.
Lenders all have different policies regarding Advantageous Purchases. As a general rule of thumb, they will allow the Consideration plus Reasonable Costs to be borrowed. For some lenders, this means up to 105% of the Consideration, for other lenders there is no limit provided that the transaction is within their usual LVR and other guidelines.
Some lenders will not allow ‘cash out’ for at least six months after the transaction, others will allow cash out at time of settlement
So you have a number of points to consider
The agreed Consideration for the Transfer
The payment of Stamp Duty on the Market Value
The declaration to the ATO regarding the disposal of the Asset
The application to a Lender for finance (if any)to assist with the purchase of the property
Other than that, good luck and hope it all goes well
Cheers
Kristine
In Queensland, my parents have transferred IPs into a family trust. The stamp duty is paid on market value and in each case, it has been acceptable to have an appraisal by a real estate agent with three recent comparable sales to justify the value.
My understanding is that the market value, on which the stamp duty is levied, is the new cost base for the future working of capital gains from the time it goes into the trust (as opposed to the actual amount that the IP is "sold" to the trust for).
Kristine, is this what you are saying, or have I misread what you said. We are being guided by professionals in this, so hopefully they get it right
.
My understanding is that the market value, on which the stamp duty is levied, is the new cost base for the future working of capital gains from the time it goes into the trust (as opposed to the actual amount that the IP is "sold" to the trust for).
Kristine, is this what you are saying, or have I misread what you said. We are being guided by professionals in this, so hopefully they get it right
.Hi Wylie
No, that's what I wrote down when I rang the ATO - I asked the CSO to repeat what he said and my notes are that he said that the actual Consideration is the cost base.
I said 'Well, the buyers will have the Transfer of Land showing the Consideration, and the Stamp Duty assessment showing the Market Value - they (my customers) are buying as a PPOR' - Wylie, why not ring the ATO yourself and confirm what would apply in your case, as the properties being in a Trust means they cannot be PPOR as the Trust itself cannot have a 'home'.
I will be interested to read the answer you get from the ATO regarding this matter
Cheers
Kristine
No, that's what I wrote down when I rang the ATO - I asked the CSO to repeat what he said and my notes are that he said that the actual Consideration is the cost base.
I said 'Well, the buyers will have the Transfer of Land showing the Consideration, and the Stamp Duty assessment showing the Market Value - they (my customers) are buying as a PPOR' - Wylie, why not ring the ATO yourself and confirm what would apply in your case, as the properties being in a Trust means they cannot be PPOR as the Trust itself cannot have a 'home'.
I will be interested to read the answer you get from the ATO regarding this matter
Cheers
Kristine
Hi Kristine. I just spoke to my brother who is much better acquainted with the details of the various transactions. He has confirmed what you are saying.
My confusion stemmed from thinking that the contracts were signed at a reduced price, but they were at market value.
I have told my brother that nothing had better happen to him because we would have a very big learning curve to get up to speed with all this.
My confusion stemmed from thinking that the contracts were signed at a reduced price, but they were at market value.
I have told my brother that nothing had better happen to him because we would have a very big learning curve to get up to speed with all this
.
Selling to Family member
Hi Success,
In NSW you will need a valuation from a Licensed Valuer in other States a letter of appraisal is ok.
You can put a different amount on the Contract and Transfer but you will still pay stamp duty at the valuation price which is market value.
You could do the Conveyancing yourself and save hundreds of dollars as well.
Hi Success,
In NSW you will need a valuation from a Licensed Valuer in other States a letter of appraisal is ok.
You can put a different amount on the Contract and Transfer but you will still pay stamp duty at the valuation price which is market value.
You could do the Conveyancing yourself and save hundreds of dollars as well.
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