Stamp duty on 2 properties settling close together

Hi, I recently settled on a property purchase on 27 th October 2015 (QLD) - price was $620,000 - stamp duty was $22,661 (,investment)

I'm settling on an an additional property purchase this week (QLD) - purchase price of $660,000 - stamp duty is $24589 (investment)

The OSR have aggregated the value of the two properties and calculated that stamp duty should really be calculated on $620,000 + $660,000) = $1,280,000 ... Therefore actual stamp duty is $57,960


What length of time do you need between property purchase Settlements for this aggregation rule to not apply? Is it one investment property per calendar year?

 

Are the properties next to each other & should be viewed as one transaction (ie development site)? Or two distinct sales in different areas?

 

Youch, that's painful

 

See
Legal Tip 10 Aggregation of Stamp duty https://propertychat.com.au/community/threads/legal-tip-10-aggregation-of-stamp-duty.654/

 

As they say you learn something new everyday, so it looks like I am done for the day.

 

Does this apply for 2 purchases each on different state?

 

Stamps are state by state so I would expect not

 

no

 

At what point do they come knocking for it? On request of the stamp payment for the second property? Say you've already settled one and paid the stamp but not yet settled the second, can they still come back and ask for more or have they had their chance already?

We bought 2 in NSW in 2013 that settled within 3 months of each other, they didn't get aggregated. Has that ship sailed for OSR, or can they still decide to aggregate this long after?

Similar with QLD. We settled on one in QLD last week, the second one settles in 2 weeks time. We have already paid the stamp on the second. Can they still aggregate them if stamp for both has already been paid, even though one is yet to settle?

Cheers.

 

They are in two different areas of Brisbane and from different developers and contracts signed over a year apart.

Anyway after it settles I'm going to ask the OSR for re-assessment.

They can come asking for extra stamp duty at any time.....lucky I had extra cash to pay the shortfall

 

Well, that sucks.

 

Just because you are buying 2 properties doesn't necessarily mean they will be aggregated. The laws in each state are different and what is aggregated in one state may not be aggregated in another.

if you are liable but have gone under the radar they can pick it up in an audit or by chance and they could come after you. Generally I think for 6 years, unless fraud is involved and then it could be indefinite.

 

Reading the links to the NSW act in Terry's tips thread, it reads that two purchases, within 12 months, where the transferee AND the transferor are the same, or closely related then aggregation should occur.

So, as the seller was different in each contract, does that mean aggregation would not occur? Or, have I read that wrong. QLD seems the same but the VIC link does't seem to suggest the seller AND buyer have to be the same or closely related for both purchases for aggregation to occur?

I could have completely miss-read these though.

@Danielt25 were your two purchases from the same seller, (or an "associated person" of the seller)?

 

Actually, we bought a property (PPOR) from the same developer for $1.86m but this settled 12 months ago (compared to the other property from the same developer that's settling this week). The contracts were signed within 4 months of each other although settlement was over a year apart .... So I imagine they are using these two from the same developer to aggregate stamp duty. lucky the PPOR has increased in value since purchase ....

Since a different IP settled 6 weeks ago I incorrectly assumed the IP settling this week was being aggregated with the IP that settled 6 weeks ago....not the PPOR from the same seller/developer as the IP that settling this week.

 

Here are the relevant considerations and an example. 10 months apart which I think is harsh but my thoughts are not worth anything in the commissioners eyes

(a) whether the transactions are contained in 1 instrument;
(b) whether any of the transactions are conditional on entry into, or completion of, any of the other transactions;
(c) whether the parties to any of the transactions are the same;
(d) whether any party to a transaction is a related person of another party to any of the other transactions;
(e) the time over which the transactions take place;
(f) whether, before the transactions take place, the dutiable property the subject of the transactions was used together, or dependently with one another, by the transferor or transferors;
(g) whether, after the transactions take place, the dutiable property the subject of the transactions will be used together, or dependently with one another, by the transferee or transferees.

Example for subsection (5)— Under 4 agreements between a builder and a developer, the builder agrees to purchase 4 lots of land from the developer for $100,000 each. The lots are dutiable property being land in Queensland and each of the agreements is a dutiable transaction being an agreement to transfer land in Queensland. Even though the sale of the 4 lots was negotiated at the same time, the agreements were signed on different dates over a 10 month period, had different settlement dates and were not conditional on each other. Under section 24 (Rates of transfer duty) and schedule 3 (Rates of duty on dutiable transactions and relevant acquisitions for landholder and corporate trustee duty), the agreements for lots 1 to 3 have been separately stamped for $2350 transfer duty. When the agreement for lot 4 is lodged for stamping, the commissioner decides this section applies because the transactions together formed 1 arrangement. Accordingly, the transactions must be aggregated under this section for imposing transfer duty and the duty apportioned between them. Under subsection (5)(a), the total of the dutiable values of the dutiable transactions on which transfer duty is imposed is $400,000, being the value of each of the lots when the liability for transfer duty arose for each of the transactions, regardless of a variation in the values since the liability arose. Under section 24 and schedule 3, transfer duty imposed on the aggregated transaction is $12,475. If the commissioner decides to apportion the transfer duty equally between the dutiable transactions, the amount of transfer duty payable is $3118.75 for each transaction. Under the Administration Act, part 3, the commissioner will make a reassessment for the transactions for lots 1 to 3. The assessment notice must state the matters mentioned in section 26(2) of that Act.

 

very broad isn't it.

 

...but, according to the NSW act:-

25 Aggregation of dutiable transactions
Dutiable transactions relating to separate items of dutiable property, or separate parts of, or interests in, dutiable property are to be aggregated and treated as a single dutiable transaction if:

(a) they occur within 12 months, and

(ab) the transferor is the same or the transferors are associated persons, and

(b) the transferee is the same or the transferees are associated persons, and(c) the dutiable transactions together form, evidence, give effect to or arise from what is, substantially, one arrangement relating to all of the items or parts of, or interests in, the dutiable property.


...which I read as both properties must be bought by party "A" and sold by party "B" ? (party being the same person, or associated person) - note, I added the bold typeface to "and".

So, if I buy 2 houses next door to the each other and I am party "A" but I am buying one house from Mr. & Mrs. "B" and the other house from a completely unrelated Mr. & Mrs. "C" next door, then the way I read the above would mean they shouldn't be aggregated?

Am I missing something?

 

Sounds right.

But if you were to buy property 1 in your name and property 2 in wife's name and both vendors were related then you could be caught.

 

Yes, agreed.

 

For a broader discussion of the position in NSW only, see NSW Office of State Revenue Ruling 22 dealing with aggregation.
Revenue Ruling No. DUT 022 | Office of State Revenue

As regards the position in QLD, see
DA030.1.2—Transfer duty—aggregation of dutiable transactions (Queensland Treasury)

There are similar rulings or determinations issued by the relevant duties offices in other states.