Join Australia's most dynamic and respected property investment community

Capitalizing Stamp Duty?

Discussion in 'Property Finance' started by House, 24th Jun, 2016.

  1. House

    House Well-Known Member Premium Member

    Joined:
    13th Sep, 2015
    Posts:
    767
    Location:
    Sydney
    Wasnt aware this was possible but came across this company who claim do it-

    "The 95% LVR with capitalised stamp duty is basically a 95% home loan, with a $20,000 credit card. Your genuine savings deposit covers the 5%, while the remaining purchase costs are placed on the credit card. The credit card will typically come with the same interest rate as your home loan, and you need to make minimum repayments on the card each month as you do with the actual home loan itself."
    Google

    Do many other lenders offer the option to do this?
     
    cheekykoon likes this.
  2. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,114
    Location:
    Melbourne
    I know Adelaide bank had a product but don't hear much about this anymore.
    A friend of mine did this and did very well out of it, got her in the market when she couldn't have otherwise and now the property is unencumbered.
     
    House likes this.
  3. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    891
    Location:
    Melbourne
    Now only available to 90%.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,104
    Location:
    Melbourne, Nationwide
    It's not really capitalising stamp duty, it's using a credit card to pay for it.
     
  5. House

    House Well-Known Member Premium Member

    Joined:
    13th Sep, 2015
    Posts:
    767
    Location:
    Sydney
    So that is all it is... Not a bad rate to save another 6+ months of budgeting for just the SD. Do many lenders offer something similar or possibility of it? Thinking it'll help a lot for the first or second IP.
     
  6. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    891
    Location:
    Melbourne
    Just the mortgage mangers that use Adelaide bank products. Home loans limited, Australian first mortgage, quite a few others.
     
    House likes this.
  7. Tony Fleming

    Tony Fleming Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    543
    Location:
    Sydney
    Can't help with the finance side of it but you can apparently (if you find the right vendor) agree on a price and ask the vendor to pay stamp duty with an inclusion in the contract and you'll add the stamp duty to the price you agreed on. So in theory if you are doing an 80lvr you are paying 20% of stamp duty at purchasing time. Little neat trick if your deposit is low but I imagine its hard to come by vendors willing to do it.
     
    House and cheekykoon like this.
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,165
    Location:
    Gold Coast
    valuers are usually on to this and treat it as a vendor rebate, and then reduce the val by as much

    ta

    rolf
     
    albanga, Tony Fleming and Terry_w like this.
  9. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,114
    Location:
    Melbourne
    Would have thought you would have to get a pretty lazy valuer for that to work!
     
    Tony Fleming likes this.
  10. Tony Fleming

    Tony Fleming Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    543
    Location:
    Sydney
    That's what I always wondered about. Cheers for clearing it up
     
  11. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,104
    Location:
    Melbourne, Nationwide
    Don't go there. You'll just have to make up the difference with cash yourself due to the low valuation and you'll pay stamp duty on the higher contracted price. Better net result to simply negotiate a lower purchase price.
     
    Perthguy, Daniel Taborsky and tobe like this.
  12. Elives

    Elives Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    539
    Location:
    Queensland
    My last purchase was price inclusive of stamp duty and legal fees worked quite well. it was with one of the big4 banks and yes you pay couple $100 more in stamp duty but one thing i hadn't thought of is when you sell you may pay less capital gains as the purchase price is higher as you included sd and legals.
     
    Last edited: 25th Jun, 2016
    House likes this.
  13. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

    Joined:
    10th Nov, 2015
    Posts:
    147
    Location:
    Perth, WA
    You can include stamp duty and legal costs in your CGT cost base regardless of whether they are incorporated into the contract purchase price. The second element of your cost base includes your incidental costs of acquiring the property.
     
    Elives and albanga like this.
  14. Greyghost

    Greyghost Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,262
    Location:
    Melbourne
    It's just an additional (usually) unsecured loan on top of the normal 90-95% LVR loan