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bought off the plan land - Can I change ownership before registration?

Discussion in 'Accounting & Tax' started by Ravi, 21st Feb, 2016.

  1. Ravi

    Ravi Active Member

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    Hi,

    I bought 4 unregistered lands around 1 year ago. 2 of them got registered recently and settled 2 weeks back while other two are not yet registered.

    I put myself and spouse as joint owners(50% each) for all lands when we signed contract 1 year ago.

    I understand once lands are settled there is no way to change ownership without incurring stamp duty.

    Can I change ownership of rest 2 unregistered lands and split them 1-1 between me and my wife without incurring stamp duty?

    Registration and settlement of above two lands is 1 month away.

    Is there a way I can correct my mistake? I understand there are several disadvantages of joint ownership and I want to avoid them.
     
  2. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    Usually a transfer has to be in conformity with the contract (i.e. the purchasers under the contract have to be the same people who the property is ultimately transferred to) or duty will be payable on both the contract and the transfer (double duty). However, there's an exception under section 18(3) where the purchaser(s) under the contract are related to the transferee(s). I haven't got any practical experience in NSW but it would appear to apply in your situation (in an equivalent situation in WA the equivalent exception should apply). You would need to provide a statutory declaration to the OSR.
     
  3. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    Terry's legal tip for transferring property between spouses after completion: Tax Tip 68: Transfers Between Spouses and Stamp Duty in NSW. In short, the transfer will only be exempt from duty when it is a transfer of a PPOR and each spouse ends up owning 50% each (whether as joint tenants or tenants in common).
     
  4. Ravi

    Ravi Active Member

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    Thanks Daniel.
    As all 4 lands are for investment purpose and plan is to start construction soon on all of them.
    So looks like we are trapped as joint owner and there is no way to separate the properties without paying stamp duty.

    I am curious what @Terry_w has to say on this.

    The problem is - joint ownership costing us 7k+ extra in land tax every year (as per current valuations).

    I am thinking would we be better off paying stamp duty and transferring properties among us instead of paying 7k+ extra every year?
     
  5. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    For the 2 properties that haven't completed yet you should be able to transfer them into single ownership without paying additional stamp duty because of section 18(3): DUTIES ACT 1997 - SECT 18 No double duty
     
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  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Daniel is right. Where spouses involved i think there is only nominal duty of $10 or so for nsw.
     
  7. thegreat

    thegreat Well-Known Member

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    imo, definitely. urgent talk to your solicitor would be beneficial
     
  8. Cactus

    Cactus Well-Known Member

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    This is why you should by and or nominee.

    If you haven't ask the developer if they are prepared to cancel and resign. Many will be just ensure you have representation to ensure you don't get left without a contract in the event there has been substantial CG and you have a dodgy developer.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Buying and/or nominee is potentially dangerous. See my 2 tax tips on this.

    No need to rescind contracts either.
     
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  10. Cactus

    Cactus Well-Known Member

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    Didn't think double duty was relevant with nomination if development work has taken place between contract and nomination. At least that is my understanding in Vic. And given this was an OTP transaction I thought my advice was appropriate.