Join Australia's most dynamic and respected property investment community

Subdividing parents' PPR

Discussion in 'Legal Issues' started by beachgurl, 11th May, 2016.

Tags:
  1. beachgurl

    beachgurl Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    455
    Location:
    Sydney
    I have a friend of mine whose parents own a property on a corner block and want to help them get into their first home. They are considering building another house on the lot and then subdividing. My friend has sufficient income to get her own construction loan without assistance from her parents.

    Is there a way for the kids to take ownership of the new house during the subdivision process? Will they incur stamp duty?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,045
    Location:
    Sydney
    Yes, just transfer title after it is split. Stamp duty will apply in NSW.
     
  3. beachgurl

    beachgurl Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    455
    Location:
    Sydney
    Thanks Terry. Is stamp duty payable on the value of the new house and land or what they spent to build?
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,787
    Location:
    Perth WA
    If the parents sell them the land only, the duty will be payable on the land. But if they are building they may have FHB concessions?
     
    MTR likes this.
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,045
    Location:
    Sydney
    It would be on the value of the property being transferred so the house and land, not just construction amount.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,599
    Location:
    Sydney or NSW or Australia
    Isn't it dependent upon what is being transferred? SD will be lowest when it is raw land & higher once built upon. Why would you want to pay more than just for the raw land (like a house & land package).
     
    Jess Peletier likes this.
  7. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,787
    Location:
    Perth WA
    That was my thought too - wouldn't they subdivide, transfer the land to the kid and then the kid builds?
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,045
    Location:
    Sydney
    Yes, if the land can be transferred without house it would result in cheaper SD
     
  9. beachgurl

    beachgurl Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    455
    Location:
    Sydney
    The construction would be under dual occ rules where the subdivision of land cannot occur til after construction.