Buying Land, Seller wants 210k + 25k Cash... Why Cash?

Hi
I got a email from a guy that is selling his block but in the e-mail he said its selling for 210k + 25k cash

I just dont see why he needs cash. Is he trying to get more money to pay less tax or something?

It sounds a little fishy, but as long as it doesnt not impact me in a bad way I dont mind...

I can see though in the books it will say I paid 210k for it but I really paid 235k

Can anyone give me some help as to what to watch out for etc or am I just worrying over nothing ?

 

If you sell the land or property down the track you would be liable for an additional 25k in capital gains.

 

Sounds like he is trying to evade tax. Probably not something to get involved with.

Make sure you get good legal advice before entering into a contract with this person.
Marg

 

Have contract and receipt for full price paid

 

Can you please elaborate this? Sorry new investor guy here

I will I dont want to just hand out that much money without it written or proof that I paid it

 

If you have a record that the $25k is part of the purchase then there would be no issue with future CG calcs.

 

Can anyone explain to me how I will have issues with CG tax later ?

 

Contract will say 210k. He takes the 25k and probably wont pay tax on it.

For you the cost base is 210k. When you sell its profit above 210 even though you paid 235. And your bank will lend on 210 so lower mortgage. Dodgy dodgy dodgy.

 

Yeh it does sound dodgy. What if he agree's to invoice me for 235k? Is that still dodgy

 

Unless the contract says 235k its still dodgy.

 

ok well when I get a chance to speak to him. Ill tell him to be sure the contract says the full amount I really paid. Otherwise he can F off. I dont see any other reason why he wants cash though. Shifty people

 

Are you dealing with an agent? Or directly? Why? Because you might get a bargain?

 

Im not dealing with anyone and I dont even know who is selling it yet. A builder who I built my first house with e-mailed me a person is selling a block which is not pubically on the market yet

I tried to visit the block but the land is not even developed yet. Unsure how anyone owns a block thats not even there yet either

 

I believe this in in Victoria,
the land will be on nomination. Not something unique. Have been happening a lot as the seller would need to pay stamp duty and then tax. So he must be selling below market value to benefit both seller and buyer. Hence, asking for cash.

 

Hi
Yes thats what they also mentioned. He said its being nominate to new buyer at original price at 210k + 25k cash, below market price

Now is this actually a good thing for me? I just dont want to put my foot in the mud

 

Dont do it.

I think the seller is doing a dodgy to avoid CGT

If/when you sell down the track the record will say you paid 210k. If its an investment you will be up for more tax

 

And if they are ok with the contract saying it's 235k ?

I don't plan to sell the house until I retire

 

Is it possible to get an independent valuation done , and then move from there.