Avoiding stamp duty

Discussion in 'The Buying & Selling Process' started by Tex333, 27th Oct, 2019.

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  1. Tex333

    Tex333 Member

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    Hi,

    can stamp duty be avoided if two willing parties so construct the sale?

    Example:
    Sell the house between the parties for $1.
    sell a car/object between the parties for the true value of the house.

    this is probably a silly question but I am entertaining selling to friends.
     
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Stamp duty is on the value not the transaction in this case. If a transaction is done at below market value (ie between friends or family) then the duty is always on the market value
     
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  3. Archaon

    Archaon Well-Known Member

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    are your friends first home buyers?
     
  4. Tex333

    Tex333 Member

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    thanks - so then how is market value determined?
     
  5. Tex333

    Tex333 Member

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    no
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes
     
  7. Tex333

    Tex333 Member

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    thanks Terry. I checked out your website but wasn’t able to easily identify which Tip applies here.
    Care to shed any more light on how to approach this?

    thanks
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Ha ha. No tip on this.
    This information is too valuable to publically share.
     
    Last edited: 27th Oct, 2019
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  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Getting a valuation from a registered valuer (not a market appraisal from an agent).
     
  10. Angel

    Angel Well-Known Member

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    You have to pay stamp duty on the sale of a car to transfer the registration.
     
  11. Guest

    Guest Guest

    Give the scheme a crack and then let us know how they came up with the market value when they come after you with lawyers :D
     
  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    If this worked, then everyone would be doing it. The state revenue office sees right through it and charges stamp duty on what they determine as the market value (from a valuation). This has already been mentioned.

    However, the bank might decide to value the property at the lower of either the contract price or the valuation. If you exchange for $1, then the bank will lend against that. So you'd borrow 80 cents (assuming you don't want to pay LMI).

    I suspect that Terry's way of avoiding stamp duty might have something to do with some sort of company ownership. There might be some ways to make this work, but it's not without its problems either.
     
    Marg4000 likes this.
  13. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Stamp duty applies to the market value of transfers. Non-arms length transfers are to be lodged with a valuation. Not all non-arms length contracts are obvious. A $1 consideration will always trigger a request for a valuation.

    A change of shareholder etc in a company is dutiable under the land rich rules which look through to the company assets.

    The buyer pays duty. Why would a seller co-operate ? Especially when a penalty regime exists for a scheme to reduce duty.
     

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