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Best Way To Transfer Property

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

  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.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Full market value sale?
     
  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
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA 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.
     
  5. flyingcow

    flyingcow New Member

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    Thanks Terry. You have given me a lot of read to do. :)
     
  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.
     
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  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business 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.
     
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  8. Corey Batt

    Corey Batt Finance Strategist Business Plus 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.
     
  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.