Hello All, An otp contract was signed May last year (in Vic), prior to any building coomencement. The base land value listed in the contract at signing was around 40K. For the purpose of this thread I have include in the attachment below the conditions in the contract relating to stamp duty. Based on the SRO victoria website, the duty payable is $710 on this amount. Now, I don't mind if the land value was an estimate and duty payable goes up (or down) a small degree, but the vendors solicitors have come back with an off the plan declaration showing that the dutiable value at purchase date was $211,750 - this comes up with a duty amount of approx $8500? I know this is wrong, I can accept if the base the value of the land at say upto 70-90K, but the higher amount is wrong. My conveyancer has agreed and has questioned the vendors solicitor, but nothing has come back. (My conveyancer has mentioned that duty can be calculated different ways, but I don't quite understand that, other than the only variable being the price of land at time of contract/sale. I do recall the land being purchased for ~660K, approx 2 yrs earlier, and considering that the development consists of 23 units, these equates to ~39K. So, what to do now? Is there anything in it for the vendors/solicitors to not respond and keep the dutiable value at a higher level. What if they do not respond as its getting close to settlement. The amount they have provide is wrong, and the reason for purchasing prior to any building works commencing was to have this saving. Tks.
Have you read the attachment - this gives all the power to the vendor. You should have tried to amend this to be more in your favour. You have basically agreed to let the vendor determine how much the property is valued and therefore how much duty is payable. Under subclause (b) you should ask them for copies of the documents they used to determine value. It may be that the vendor's tax position will change by having the valuation higher at the point of purchase. This is why you should only use solicitors. Ps I don't do conveyancing
Yes a solicitor was used! They did a contract check and said it was fine. Since then, I have got rid of them, as they caused issues with a previous settlement.
My understanding of OTP concessions in Vic is that duty is based on the improvements to the land under the dev and not the land itself....The vendors provides a declaration towards completion that is used to determine the duty. Its based on the devs allowed costs etc. Off-the-plan sales concession | State Revenue Office The formula for determining this is explained in the link above. The vendor does the dec and the $212K referred to in their declaration of the enhanced improvements to the raw land ($39K)....If looked at that way duty on $212K is far preferable to duty on $600K as an example isnt it ? I would think a expectation of stamp duty of under $1k absurd. You may be looking at it like its your share of land tax. Duty will never be a share of the unimproved land value prior to the dev.
Just some more info Terry, The sale price for the property was 385K, so I would think the $212K is actually quite high! I say this based on another property I settled on earlier this year. Its say price was 500K, and its dutiable value was 128K (I think from memory duty was about 2.5K). This property was in Moonee Ponds, so it made sense that the land component was more (ie 128K). The property in Question is in Reservoir (both similar sized properties) and would not expect land value to be any near 212K!
The point I'm trying to make, and I don't understand is this: Back in July I settled on an OTP property. Contract was signed before any building works commenced and contract price was $499K. The contract had the land value(not exact wording) noted at ~$130K. Upon settlement, the stamp duty payed was approx $3K. Fast forward to now, we have this other property coming up to settlement. As per the previous one, contract signed prior to any works commencing, but at a price of $385K. This contract has a base land value of $40K (3 times less than the one mentioned just above). I have been informed (ie, my solicitor from advice from vendors solicitor) that stamp duty will be ~$8.5K How... How can an OTP property purchased prior to any building works commencing for $499K, have stamp duty calculated at ~2.5K, whereas another purchased prior to building works for $385K, have stamp duty for ~$8.5K?????? Both in same state (VIC)....
@JK200SX did you read this? Off-the-plan sales concession | State Revenue Office It doesn't seem straightforward.
I think you are confusing an estimate of the land value with the 'official' value for stamp duty purposes.
