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.
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
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
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
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.
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.
