Transfer duty concession with existing tenant - QLD

Discussion in 'Accounting & Tax' started by Christina46, 23rd Aug, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Christina46

    Christina46 Well-Known Member

    Joined:
    3rd May, 2016
    Posts:
    126
    Location:
    Brisbane
    My husband and I have just secured a property that we intend to move into as our PPoR. The property is currently tenanted (lease in place until mid December). We are going to be away for Christmas, so won't be moving into the property until January.

    I am wondering whether we can let the current lease be extended so the tenants don't have to move out just before Christmas and still keep our transfer duty concession.

    My reading of the Qld Office of State Revenue website is that if the lease is extended before the transfer of the asset (which it says is usually the settlement date) then this should be ok.

    I'm speaking with Solicitor to go through this (and some other mattes) tomorrow, but thought I might be able to get a quick answer here?
     
    Christina46, 23rd Aug, 2017
    #1
  2. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    14,015
    Location:
    Brisbane
    You cannot extend the lease.

    If you don't settle with vacant possession, you will pay some capital gains tax (pro-rata for time) so for a month before you move in, and assuming you stay a long time, it won't be much problem.

    That's my understanding and the same situation our son found himself in when he settled ten days before the lease ended.

    I'd get the tenants out, move in if you can, and have someone house sit if you are worried about it being empty.

    The hassles of having a little bit of extra rent (in my opinion) is outweighed by the risk to your concession and the fact you get into capital gains tax territory.
     
    wylie, 23rd Aug, 2017
    #2
  3. Christina46

    Christina46 Well-Known Member

    Joined:
    3rd May, 2016
    Posts:
    126
    Location:
    Brisbane
    Thanks @wylie. Settlement date is 3 months prior to the lease ending - having a short settlement and letting the tenants stay for their lease term were key drivers for the sellers.

    Understand the CGT implications. We are planning on being there looooong term, so hopefully the CGT issues will be minimal.
     
    Christina46, 23rd Aug, 2017
    #3
  4. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    14,015
    Location:
    Brisbane
    Ok... so there will be some CGT component anyway. But I know my son was told by OSR he most definitely could not extend the lease and had to move in as soon as the sitting tenants' lease finished.
     
    wylie, 23rd Aug, 2017
    #4
    Christina46 likes this.
  5. Christina46

    Christina46 Well-Known Member

    Joined:
    3rd May, 2016
    Posts:
    126
    Location:
    Brisbane
    Thanks.
     
    Christina46, 23rd Aug, 2017
    #5
  6. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    14,015
    Location:
    Brisbane
    I'm also glad you are seeing a solicitor to check what I've said. I'm not offering legal advice, but this is how it was a few years ago for my son.
     
    wylie, 23rd Aug, 2017
    #6
  7. Christina46

    Christina46 Well-Known Member

    Joined:
    3rd May, 2016
    Posts:
    126
    Location:
    Brisbane
    Bit of an update.

    My solicitor has advised that if the current owners extend the tenants lease PRIOR to settlement, the home buyer stamp duty concession is not impacted. As long as we as the buyers don't extend/enter into a new lease AND the tenants are gone within 6 months of settlement all is ok.
     
    Christina46, 24th Aug, 2017
    #7
    Marg4000 and wylie like this.
  8. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

    Joined:
    18th Jun, 2015
    Posts:
    2,025
    Location:
    Brisbane
    Spot on.
     
    RPI, 24th Aug, 2017
    #8
    Christina46 likes this.
  9. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,421
    Location:
    Qld
    This is a good example of why it pays to get good legal advice.
    Grea outcome for you.
    Marg
     
    Marg4000, 24th Aug, 2017
    #9
    Christina46 and Paul@PAS like this.
Developer Tax Services

Price Accounting provide tax services and advice to developers on issues incl GST, Tax + Structure. Our free developer toolkit covers many of the key elements and is critical to a new development tax plan. Email for your copy and our new client pack.