Join Australia's most dynamic and respected property investment community

Legal Tip 89: Stamp duty on Off the Plan purchases in NSW

Discussion in 'Legal Issues' started by Terry_w, 16th Oct, 2015.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,618
    Location:
    Sydney
    With property purchases in NSW liability to pay stamp duty arises on execution of the contract of sale. s12(2) Duties Act 1997 (NSW) http://www5.austlii.edu.au/au/legis/nsw/consol_act/da199793/s12.html


    But payment can be deferred for up to 3 months because of s17 http://www5.austlii.edu.au/au/legis/nsw/consol_act/da199793/s17.html (however where the property is being mortgaged the duty will need to be paid about 2 weeks before settlement).


    BUT, where the property is off the plan the rules are different. s49A makes the liability arise on the earlier of
    • settlement,

    • assignment, or

    • 12 months after the date of the contract
    http://www5.austlii.edu.au/au/legis/nsw/consol_act/da199793/s49a.html


    However, you will still have up to 3 months to pay because of s17.


    Off the plan is defined at s49A(4) as:

    “"off the plan purchase agreement" means an agreement for the sale or transfer of dutiable property, being land on which a residence is to be erected or developed before completion of the sale or transfer.”
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,618
    Location:
    Sydney
    Note that new laws have been introduced in NSW so that 'foreign persons' do not get the 12 months to pay for duty for off the plan purchases. They must pay duty within 90days.
     
  3. thesuperman

    thesuperman Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    80
    Location:
    Somewhere
    It's been a while since this strategy, but buying of the plan on a Put & Call Option still get around the issue of having to pay the stamp duty early on these long settlement properties?
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,618
    Location:
    Sydney
    Not in NSW or VIC.
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,611
    Location:
    Sydney
    OTP valuation is also determined by the vendor and NOT what your contract says.