Developer offering discount if some of purchase price paid in cash???

hi there,

A mate of mine is in the process of buying an owner occ apartment.

This is a new development. The developer has offered a significant discount on purchase price if the purchaser pays roughly $35k in cash via a solicitors trust account and the contract for sale the shows a reduced purchase price. Example below.

Is this legal and as the purchaser can my mate get in legal trouble doing this?

Property value - $700k
Offered sale price - $670k (if)
35k paid in cash via trust account (and)
Sale price on mortgage documents is $635k

Appreciate and info/feedback available.


Cheers
Andy

 

Developer is avoiding tax on profit, your mate is avoiding stamp duty and complicit in defrauding the SRO.

 

Does your friend look good in prison stripes?

pinkboy

 

Of course this is obviously fraud but it is also stupid because it really exposes your friend to being exploited by the developer.

How will he finance it? Will the valuation stack up? Will the developer take some liberties with the agreed contractual terms given your mate really can't litigate given he has participated in fraud? Will the next buyer/renter think the asking price is a bit steep given the sale price - especially once the newness factor has dissipated.

My guess is that is not even worth $700k to begin with.

Where is it located?

disgraceful conduct, especially on the part of the solicitor!

 

Money laundering.

Your mate would also suffer increased CGT when sold

 

Or not suffer as big a loss.

 

Not on an owner occupied property he wouldn't.

 

So how is the $35K explained legally?

Mate would need documentation to prove the payment if the development goes pear shaped.

Finance would be based on the lower purchase price.

And yes, your mate can get into trouble. He/she is signing legal documents knowing the information on them is incorrect. Fraud charges likely.
Marg

 

Report it to the ATO. IMO the only benefit from cash fraud is to the receipient and all problems are with the payer.

Money laundering and anti terrorism offences could see them spending time in jail. Imagine if the developer used to proceed for terroism. Feds could put them in jail for a long time. Tax crimes are a lesser offence but still Crimes Act

 

Hi everyone,

Thanks so much for the replies. I've spoken with the potential buyer and passed on this info so he has decided to steer clear of the property.

After some deeper research I helped him with the property wasn't worth $700k anyway, and the seller wouldn't budge on price whatsoever, unless the buyer went down the path of the 35k under the table deal.

Unfortunately all previous comms and offers my mate made before he reached out to me were verbal and not written but ha plans to contact the ATO regardless.

On a positive note, we got him into a nice penthouse apartment which he is absolutely in love with, still within budget (albeit more expensive than this one) so a good result all round!


Cheers
Andy