Commercial Stamp duty Reduction for South Australia – July 2017 onwards

Discussion in 'Commercial Property' started by Corey Batt, 10th Aug, 2017.

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  1. Corey Batt

    Corey Batt Well-Known Member

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    As part of rolling changes to help the SA economy, the second stage of business/investment reforms has come through this financial year with commercial stamp duty being reduced to a third of the normal rate of duty. Come the start of the new financial year in 2018 this will become fully abolished – opening an interest property based opportunity in not having to fork out 10’s to 100’s of thousands of dollars in government charges.


    How much are we talking?

    Let’s look at a $1,000,000 purchase in Adelaide currently. Based on a purchase at this level – this financial year the stamp duty changes results in a reduction of $32,553.33 in government charges. Here’s a little breakdown of the stamp duty comparison between the standard, rate, new discounted rate and the final abolished cost.

    [​IMG]

    Whilst this isn’t only a considerable saving in costs for making an investment or business purchase – it also increases the viability of considering commercial property as an investment as it reduces what has been traditionally the biggest barrier to entering the commercial market – deposit costs. Let’s compare how a residential purchase vs commercial purchase now stacks up under the new reduced environment:

    [​IMG]

    With the reduction the variance between the two is $21,447 and will close to $5,170 post July 2018.

    This is a very interest time creating a strong incentive to consider commercial property – with the residential vs commercial deposit gap closing, whilst the ability to borrow in the commercial environment for investors remains strong even in the current APRA regulatory environment – so even those with nil borrowing capacity in the residential space can continue growing in the commercial asset class.

    Whats your thoughts on this move - does the prospect of nil stamp duty for commercial purchases increase your likelihood in considering this asset class?
     
    Last edited: 11th Aug, 2017
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  2. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    This has got to be good for the economy.
     
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  3. D.T.

    D.T. Specialist Property Manager Business Member

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    Yes, it'll be great. I can see investors doing well by getting into that game.
     
  4. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Might be more 'flipping' happening too.
     
  5. Corey Batt

    Corey Batt Well-Known Member

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    This is the first thing I thought too - this will allow for viable flipping. Could be especially lucrative if you can buy rundown commercial properties, refit/redesign (potentially split into multiple tenancies), tenant and onsell.
     
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  6. aussieB

    aussieB Well-Known Member

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  7. Scott No Mates

    Scott No Mates Well-Known Member

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    It doesn't help if you still can't lease them. However an incentive's an incentive.
     
  8. Corey Batt

    Corey Batt Well-Known Member

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    Certainly the case for CBD offices the last time I saw the stats - but interestingly last information I was perusing had industrial vacancies etc tightening up. Go figure in this current environment.
     
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  9. Scott No Mates

    Scott No Mates Well-Known Member

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    That's one measure - also Ling term reconossance visits through Industrial areas giving you a snapshot of commercial activity (for lease signs/leased) - how long are they hanging around, are they relocating or expanding or new?
     
  10. jim1964

    jim1964 1941

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    Yes, i am in.Do you think our friends the banks will take advantage of this and want a bigger piece of the action?
     
  11. Corey Batt

    Corey Batt Well-Known Member

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    I can't see why they would - policy is generally national and I think they're keen for anything which will encourage further business/commercial lending at this time.
     
  12. adam duckworth

    adam duckworth Well-Known Member

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    well, this has definitely has boosted my confidence into getting into CIP, now they just need to do this in the other states too :)
     
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