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OTP - stamp duty

Discussion in 'Accounting & Tax' started by MTR, 19th Jul, 2015.

  1. MTR

    MTR Well-Known Member Premium Member

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    Am currently selling OTP 4 townhouses.

    Looks like I may have an offer on the table, FHB market asking what is stamp duty payable.

    Concrete has not yet been poured.

    Any idea how I work this out please?

    Thanks
    MTR:)
     
  2. MTR

    MTR Well-Known Member Premium Member

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    Just for information for those who may find themselves in similar scenario.

    This is what my solicitor has advised, in terms of stamp duty as the land will be cut up into 4 lots and no building as yet. I basically advise on the value of each lot and the buyers will be paying stamp duty on this amount at applicable rate. There may be other minor fees also associated with this not sure?

    MTR:)
     
  3. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I think that sounds right.
    My understanding is that it's one of the benefits of buying OTP as you only have to pay stamp duty on the land component rather than the whole thing.
    You should probably check with your accountant about apportioning profit into the land component, ie is it better to increase land value or the construction value.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Varies from state to state. In NSW it would be stamp duty on the value or purchase price, whatever is higher.
     
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  5. MTR

    MTR Well-Known Member Premium Member

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    Yes attractive option for investor
     
  6. MTR

    MTR Well-Known Member Premium Member

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    Land has increased significantly, ok
    Thanks
     
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    My general understanding it the stamp duty is charged on the property value at the time of signing the contract with the purchaser. Given slabs haven't been poured yet, that would be the existing land value.

    If you're using finance to build, the bank would have a valuation which should include the unimproved value (essentially the land value). This may not be the final land value, but it might be a start in the right direction.

    In Victoria, developers provide the purchaser with a declaration stating the dutiable value at purchase, which is what the stamp duty is calculated on. I believe their solicitor prepares this document, so I'd go to them for specific advice on what needs to be done to properly ascertain the land value.
     
  8. mrdobalina

    mrdobalina Well-Known Member

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    Does it depend on when the title is issued?

    My understanding for WA is:
    - If you're doing survey strata, get titles issued, enter into a sales contract, then construct... then the stamp duty is payable on the land component; but
    - If you're doing built strata, the titles get issued after construction has been completed... Then stamp duty is payable on the completed product, regardless of when the contract is signed.

    I'm probably wrong on both accounts so also keeen to know the answer.
     
  9. MTR

    MTR Well-Known Member Premium Member

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    My

    This is Melb and my solicitor stated its only land value as we as we are selling OTP, values will change as we start progressing the build
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    In Vic I believe it is on the value as of the date of the contract.
     
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  11. mrdobalina

    mrdobalina Well-Known Member

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    Ah ok.

    Any idea what the answer would be for WA?
     
  12. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    No I think you're right for WA, though you can probably sell prior to survey strata or green title being issued but have that contract part subject to titles being issued.

    If it's built strata then it's at the end so it's stamp duty on the whole even if contract is prior to titles being issued.
     
  13. willy1111

    willy1111 Member

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    Hi @MTR,

    May I suggest you google "osr vic duties form 4a" and work your way through the pdf...there you shall find the answers you seek ; )
     
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  14. Be Developer

    Be Developer Property Developer Business Member

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    +1

    Land value
    Cost of work done on land
    Plus soft cost

    Are factored in for stampduty calculation on the day of contract.
     
  15. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    AND add GST into the equation. Duty generally applies to the GST inclusive contract price. That gets overlooked sometimes.