Subdivision after Construction of Dwellings

Hi all,

I have a hypothetical scenario below, and wanted to know if anyone could provide their opinion on whether stamp duty would be payable:

- Person A and B buy land as 50/50 owners ($500,000 each)
- They buy the land through a bare trust and deed of partition structure
- Person A and B develop 2 townhouses on the land (market value $1,200,000 each on completion)
- Person A and B THEN subdivide the block (after Construction is complete) to take 1 townhouse each

Is stamp duty payable if subdivision takes place AFTER the construction is finished, at which point the market value of each townhouse is $1,200,000? I.e. would stamp duty be payable on the market value of the townhouse, or would this be a double payment of duty?

@Terry_w

 

Stamp duty is paid on acquisition of the land in every state.

Each state varies with its application of duties, exemptions for partitioning and other mechanisms,
Subdivision doesnt affect duty. Only a change of title impacts duty and taxes.

Seek legal advice applicable to your requirements in your state

 

Hi Paul,
As above, the title would go from 50/50 to 100% of 1 title to Person A and 100% of 1 title to Person B. My query really went to whether the timing of the subdivision (before or after construction) was relevant in this case, given a bare trust is already in existance...

 

It depends if the deed of partition is recognised and its terms acceptable for OSR in your state. Legal advice applicable to the requirements in your state would be very prudent.

Many advisers would submit all the documents prior to execution for opinion to avoid concerns later

 

Tax Tip 236: Stamp duty and Partition of Land in VIC after settlement Tax Tip 236: Stamp duty and Partition of Land in VIC after settlement