On-selling to a FHB before titling?

Discussion in 'The Buying & Selling Process' started by Browneyed, 27th Jan, 2020.

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  1. Browneyed

    Browneyed Active Member

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    Hi all,

    Who would pay the stamp duty in this scenario in Vic?

    Original buyer on-sells a block of land before settlement to a new purchaser who is a FHB.

    B.
     
  2. Curious2019

    Curious2019 Well-Known Member

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    I believe you are talking about a nomination sale. If you sell the property by nomination for the exact same price on the original contract of sale, then I believe you can avoid stamp duty and the purchaser pays it. As soon as you sell for $1 more than the contract price, you both have to pay stamp duty.
     
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  3. Browneyed

    Browneyed Active Member

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    Thanks Curious!
    I was actually talking about selling at a profit before settlement (before paying out stamp duty).

    Secondly, I believe a FHB would not pay duty as per the Victorian exemption -?

    B.
     
  4. Curious2019

    Curious2019 Well-Known Member

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    To make a profit, you will need to work out what your stamp duty on the contract price is and account for it in your sales price. You may struggle to get a buyer though as they might just buy directly from the developer if there is more land available at a similar price point.

    Here’s the link to the SRO site that talks about various scenarios.
    Sub-sales and duty | State Revenue Office

    FHB may be eligible for stamp duty exemptions or concessions but that has no relevance to you and your stamp duty obligations.
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    the buyer pays duty. If you contract and then onsell both you and the end buy pay.
     
  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    For vacant land it could also pose a costly issue for GST depending on the circumstances. Most definitely a issue for legal advice concerning the contract/s and duty and GST issues. If GST applies its quite easily fixed if the contract is drawn up the right way.
     
  7. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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    Check your contract: the vendor may not allow this, or only with their prior written permission and for a fee. A Deed may also need to be signed.

    Some vendors will not allow you to profit without their agent receiving a commission.
     
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