Stamp duty - first time home buyer

Hi all,

I was hoping I could receive some input regarding my situation.

Context: I am not a permanent resident / citizen (however I do hold an 820 Partner Visa) and my partner is an Australian citizen. We have been presented an opportunity to purchase a property for $750k in Victoria (both first time home buyers).

Our intention is to structure this as "joint tenants" to ensure we receive the exemption from the foreign purchaser stamp surcharge.

My questions are:

• Under a "joint tenants" purchase - would the dutiable value of the property be calculated on an individual basis i.e., $375k each?
• If the dutiable value is allocated 50/50 - then presumably my partner qualifies for the first home owner concession and would not pay any stamp duty?
• Would I also be entitled to the concession or would stamp be payable on my 50% ownership of $375k?

I was previously informally advised that we could purchase the property as "tenants in common" i.e., 90% in her name 10% in mine. However, having conducted further research I believe a TIC structured purchase would not qualify for the foreign stamp duty surcharge exemption (one of the qualifying criteria of the exemption is "the land-related interest in residential property is transferred jointly to the foreign purchaser and the foreign purchaser's spouse or domestic partner" ).

The overarching goal here is to avoid paying the foreign investor surcharge and achieve an effective stamp duty outcome. I have sought advice from this from a solicitor who was unfortunately unable to provide a solid answer.

All input appreciated.

Cheers

 

Complex legal advice is needed
Make sure get legal advice from a solicitor too, I have been approach by someone in the exact same situation with NSW land where they are up for more than $50k in additional duty chased for 2 years after settlement.

 

Be aware of the Foreign Investment Review Board rules which impact this proposed acquisition and the rules that may force its sale later. See a SOLICITOR about these issues and the surcharge duties and land tax issues. It is quite complex and knowledge will avoid VERY costly issues later. Buying with approval is not that complex BUT avoiding the tax issue may even be wise.

Some lenders will allow a spouse co-borrower with title in just one name and that is a option to consider. A solicitor may even suggest some ways to do that AND later convert to two names on title without major costs if you are applying for citizenship which can take a LONG time. Hoiwever such arrangements need sdisclosure to the FIRB and approval which shouldnt pose a major issue if the dwelling is a HOME. You also may need to see a broker about how finance approval could pose some difficulties.

Google for solicitors who offer advice on FIRB matters.

 

Thank you both. I am intending to consult a solicitor formally once we find someone suitably experienced in these matters.

For now, I believe the safest structuring is as joint tenants, everything 50/50 which (in Victoria at least) negates the need for FIRB approval and avoids the stamp duty levy.

Otherwise, do you have an opinion on the following please:

Under a "joint tenants" purchase - would the dutiable value of the property be calculated on an individual basis i.e., $375k each? If this is the case then presumably my partner qualifies for the first home owner concession and would not pay any stamp duty (with full rate duty levied on the $375k owned by myself).

Or, would stamp duty be levied collectively on the $750k purchase price and therefore no entitlement to stamp duty concessions.


Cheers

 

Duty is calculated on the value of the property transferred

 

Thanks - considering it would be owned 50/50 between my partner and I. Would the value of the property transferred to my partner be $375k (and stamp duty levied on this)?

 

what are you transferring to the partner?

 

To be blunt. You shouldnt even be considering purchase until you address the issues with a solicitor. Do you understand what the FIRB rules is for joint tenants and how it differs for 50% Tenant In Common. ??

 

Thanks Paul - I am confident that FIRB exemption will apply if purchasing as joint tenants with my australian citizen partner (https://firb.gov.au/sites/firb.gov.au/files/guidance-notes/04_GN_FIRB.pdf).

Terry - I will not be transferring anything to my partner - we expect to purchase the property as joint tenants. My query is therefore whether we will be assessed for stamp duty as two owners of $375k properties or one owner of a $750k property?

 

Jointly

 

The "owner"is two persons with a joint interest. This will apply for all issues EXCEPT foreign person surcharges where each "interest" is considered sperate to that of the other. Eg VIC will assess foreign purchaser duty and land tax to ONE owner. Both are liable if this isnt paid.

The problem with the limited JT exemption JT is if you move out of the property or the country and DIDNT obtain FIRB purchase approval. You can buy all you like. The exemption on HOLDING ownership is different to prohibited acquisitions of existing dwellings.

Non-resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, reflecting the fact that foreign persons who are temporary residents need a place to live during their time in Australia, temporary residents can apply to purchase one established dwelling to use as a residence while they live in Australia. The purchase of an established dwelling in these circumstances would normally be conditional on the foreign person selling the property when they leave Australia, or cease being a temporary resident and do not become a permanent resident or an Australian citizen. Temporary residents cannot acquire established dwellings to rent out or for use as a holiday home.

https://firb.gov.au/sites/firb.gov.au/files/guidance-notes/01_GN_FIRB_1.pdf