Surcharge on Foreign Purchase Advice

Hi all,

A little long winded but I thought I would share my whole situation as someone may be able to offer some further advice beyond the thread title.

Background
I work in a financial advisory company that was jointly owned by another financial service company that specialised in off-the-plan investment property. Around a year and a half ago, a new development in East Brunswick was pitched and the company offered apartments to staff members. Other than location, one of the most appealing aspect of the property was the VIC pre 1st July 2017 Stamp Duty treatment (valued on land and then apportioned to number of apartments).
I had been working for the company a short while and had saved around $8,000. I spoke with one of the advisers explaining the situation and it was agreed that I would sign the contract (23 June 2017) and pay the 10% deposit (total $44,000) at the end of Feb 2019.
At this point I should point out I am on a 457 working visa, and had plans to transition to the 189 P.R once I had worked the full 2 years.

I received an email earlier this year from the advisory firm (the one that specialises in property) asking if I was aware of the additional surcharge I would be liable for if my P.R did not come in time. I asked one of the senior advisers I work with and who had a property a few years previously with his partner and who is also a temp. resident. He explain it was 3% for him but said there was an increase to 7%, but his partner owned 99% and he owned 1% so paid this additional 3% on 1% of the stamp duty.

Fast forward to now. I am currently living with my partner, an Australian Citizen. I wanted to implement a similar strategies with her (I know what you are all saying now!). Firstly, I spoke with a mortgage broker who advised I should have 20 - 25% ownership for myself in order for my income to be taken into consideration to service the loan. I then spoke to the property investment advisory to tell him my plans. He worked out the stamp duty i.e. dutiable value of $75,000, then apportioned it to the ownership structure which was worked out to be roughly $3,000. He then checked with the property law clerk who advised him that I will be up for 7% on the property value regardless of my ownership. I am certain most of you are reading this thinking 'well of course', however, I was very green to all of this and the opportunity to purchase my first investment property clouded my judgement and relied on others rather than my own research.

Has anyone got any advice in regard to this? There is no chance i will be able to save an additional $30,000 before settlement and with the delay in the visa process, I do not think my P.R will come through in time.

Wishful thinking but I do not suppose I would be considered 'not foreign' if I am awaiting my P.R or on a bridging visa? The only option I could think of is place 100% ownership in my partners name but her income levels will not be enough to service the loan. Would any broker consider both incomes despite me having a 0% ownership? Again, wishful thinking.

Any advice, guidance, information would be greatly appreciated.

Thanks,

Billy.

 

You needed legal advice, prior to signing the contract. The issue was reasonably forseable since residency takes years. There are a host of FIRB issues to consider along with state duty and land tax surcharges. You now need to revisit that issue and get legal advice on the duty issue.

Is this broker independent of the employer arrangements ? Strange they say 20-25%...which is it ? Is that the same for all potential lenders ? Doesnt seem right. Why cant they address your question about guarantor loans ? I would suspect that a person without residency wont make a great guarantor and some lenders wont allow co-borrowers unless both are on title.

 

you seem to be taking legal advice from everyone except a lawyer!

Strange thing for the broker to say too - its wrong.

 

Hey @BillyT I am experiencing a similar situation except it is my partner who is person on the bridging visa. I am currently working with my lawyers but unfortunately also go caught off guard by this totally my fault but still hoping there may be a trick to minimise this?

cheers