Best Way To Transfer Property

Discussion in 'Accounting & Tax' started by flyingcow, 6th Mar, 2016.

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  1. flyingcow

    flyingcow New Member

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    Hi everyone!
    I am looking at developing 3 units, through a company. Any recommendations on how to transfer/sell a unit to a friend, in the best cost effective way? Property will be in Adelaide. Construction will start in a few months.
    Thanks.
     
    flyingcow, 6th Mar, 2016
    #1
  2. Terry_w

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

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    Full market value sale?
     
    Terry_w, 6th Mar, 2016
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  3. flyingcow

    flyingcow New Member

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    Reasonable offer, won't be giving it away, but won't be pushing for full dollar.
    Really it is the change of ownership charges that I would like to minimise, anyway to reduce the stamp duty payable? Does it make any difference to sell before or after development? Can I enter into a sales contact early without adding much value to the land (i.e. before construction) but the bank would still have the loan on the property till end of construction.
    Thanks
     
    flyingcow, 6th Mar, 2016
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  4. Terry_w

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

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    You could possibly sell off the plan to reduce the value for your mate. Not sure how duty is assesed in sa though.

    You could transfer land to him now at the lower value. But that may not work with developing.

    See my legal tip on deedsnof partition too.


    He has to consider the taxatiin aspects too including claiming any interest.
     
    Terry_w, 6th Mar, 2016
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  5. flyingcow

    flyingcow New Member

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    Thanks Terry. You have given me a lot of read to do. :)
     
    flyingcow, 6th Mar, 2016
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  6. Rob G

    Rob G Well-Known Member

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    Does GST apply?

    I suspect from your statement "develop 3 units through a company" that it does.

    See if you are eligible to use the GST margin scheme, e.g. purchased land from an unregistered seller.

    Even if your associate purchaser is entitled to an ITC, their stamp duty payable is usually based on GST-inclusive value.
     
    Rob G, 7th Mar, 2016
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  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I agree with Robs comment re GST. One issue for clarity - Use of a company doesn't trigger the GST but your explanation of "develop 3 units". GST applies to sale of new residential premises especially where intent is to do so to produce profits.

    Deed of partition is also a GST trigger. Get legal advice that covers the tax issue too.
     
    Paul@PAS, 7th Mar, 2016
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  8. Corey Batt

    Corey Batt Well-Known Member

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    Selling OTP should reduce the stamp duty component somewhat - but get specific advice.

    As always the governments will want their piece of the cake.
     
    Corey Batt, 7th Mar, 2016
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  9. Rob G

    Rob G Well-Known Member

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    OTP is even more reason to suspect income tax & GST apply because of the commercial nature of the transaction.
     
    Rob G, 7th Mar, 2016
    #9