Exemption on stamp duty

So I'm buying OTP at the moment in NSW for $500k and it'll be completed next year. hypothetically speaking, property price goes up and when I apply for loan, the bank valuation comes at $600k.

Can I request the val to only be $550k so that I get exempted from stamp duty?

And once settlement is done, would it be possible to refinance on higher valuation to unlock some equity?

 

May be wrong on this, but you may be able to pay the duty earlier based on the contract price before a valuation is done at all...(it works that way in the ACT).

Its late and understanding law was never a strong point - but the below is from the OSR website - doesn't make much sense to me though!

I've had a few clients pay it a few months before and show it as part of the 'funds to complete' when applying for NSW OTP loan settlements.

When purchasing property 'off the plan', the duty must be paid within three months from the date of:

• completion of the agreement
  
• the assignment of the whole or any part of the purchaser's interest under the agreement
  
• the expiration of 12 months after the date of the agreement, whichever occurs first.
  

 

Stamp duty is based on PURCHASE price not valuation....so your fine.

Presuming your eligible you get except for your stamp duty at your $500k purchase...and can get loan at 80% valued at $600,000 as well.

 

That is certainly not the case in Victoria and I would be surprised if it was in NSW.

From the NSW website;

http://www.osr.nsw.gov.au/taxes/transfer-land/about

 

As above; its on the purchase price, the quote from OSR is in line with this ' exchange' is when the OTP COS is executed ( not settlement)

 

Simply put, you pay stamp duty based on the value of the property when you sign the contract.

This is why OTP properties are often attractive, because the value of the property is often negligible if construction hasn't started and people only pay stamp duty based on the land, not on what they actually purchase.

@bonanzawealth you'll probably find for your OTP purchase you probably only pay stamp duty on a value of about $100k - $200k. Your conveyancer will get documentation from the builder to determine the value at contract signing.

For existing properties, the value of the property is usually determined by the contract price. An exception would be if it was a favourable purchase, such as buying at a discounted price from a relative. In this case a market valuation would be used to determine the actual valuation.

 

s 12(2) Duties Act NSW http://www.austlii.edu.au/au/legis/nsw/consol_act/da199793/s12.html
Liability arises when contract entered into

 

Careful now you Mexicans. In Victoria you pay stamps on land value pre breaking earth but everywhere else that I'm aware of and definitely in NSW and Canberra you pay on the "contract price". Some bright sparks tried to do split land and build contracts for off the plan units but the revenue office (and banks) shut that down. No can do with shared walls.

 

So Marty you're saying in NSW there are no stamp duty savings for OTP purchase at all? Ouch!

 

Not unless your a FHOB Peter. No savings for investors, although there is/was (may have expired) a $5k rebate in NSW for new OTPs duties.

In the ACT pretty sure you pay duty at exchange.

Cheers,
Redom

 

This is what I was trying to get to, although in a poor manner!

I meant to say don't assume because there is a contract of sale that this will automatically be accepted as the value for Duty purposes. Usually it is but only because it matches Market Value.

 

If you are buying from a relative they will prob check it in a bit more detail or if it is really well off where properties are selling for e.g. your COS has 200k yet median price is 500k then they would check into the transaction.

If you purchase at 400k and the median is 500k I doubt they would look into it much unless it was family orientated.

 

I think you're wrong about Victoria.

 

OTP in ACT you get 12 months from exchange to pay.....useful given stamp duty is tax deductible here so can time the payment prior to tax time if beneficial

 

I've been involved in several cases where the State Revenue Office hasn't accepted a contract price as market value for various reasons. In cases where multiple properties had sold in one line or when property had transferred via a Contract of Sale that was deemed to be part of a larger company transfer.

"Generally the amount of land transfer duty you have to pay depends on the price you paid for the property, or its market value (whichever is greater). "

It's the value that matters not the contract price (unless that works in their favour of course).

Now things might be getting confused with the OTP aspect as I'm not certain what part you think is wrong. As was clarified above, its the value when the Contract is Signed.

 

http://www.osr.nsw.gov.au/grants/nhg

Very simple. You get a grant of $5,000 towards the purchase of new homes, homes off the plan and vacant land on which a new home will be built.

 

Yes that's correct. There is a $5k reduction at the moment in nsw for new property incl off the plan and vacant land but that's a temporary measure and is subject to thresholds.

 

What do you mean you can get a loan at 80% valued at 600k? If my land registers in June next year, and my H&L package was purchased at 620k and is now worth 800k, are you saying that I don't physically have to come up with 20%?

 

Yes that is right as long as the contract is over 12 months old quite a few lender will go off the valuation to determine the LVR . Rather than the usual which is to go off the lower of the val or contract.

So potentially no contribution needed.

 

And if it's under 12 months? It should be around the 15 month mark unless they somehow get the developing done quick..and which banks generally do this?