So my mate was telling me last night that he is planing to buy off-the-plan unit that cost $660k and he'll have contracts.
One for unit at $549k and one for garage at $111k and apparently with this you fall below first home buyers stamp duty concession which is set to $550k in NSW and won't have to pay stamp duty.
Sounds a bit dodgyy to me. Is that even possible?
Cheers
Thanks and corrected.
Does that mean the house and garage are not on the same title?
He should speak to a solicitor or conveyancer before doing a dodgy
I'm not sure how he's planning on doing that.
There are probably penalties for trying to circumvent being eligible for the first home buyers stamp duty concession.
Both contracts will be aggregated and the duty would be charged on the total value. This would also apply to any exemption or concession which may apply to the transaction. If your friend pays lower duty and claims concession using this strategy, surely he would be investigated later and penalty and interest maybe applied.
Thanks mate
Do you have a source for this?
It seems reasonable to buy a flat for $x then perform a separate transaction for another item like a parking spot.
Many developments have seperate parking titles so owners can suit their needs, whether by buying an extra space if needed, or selling if not.
If he decided to buy two flats, would you also think they were to be aggregated? How about if he bought no flats and two car spots?
And what if one was bought today, and one in a week, or a month, or a year?
I appreciate posts saying doing this looks dodgy, but I'm far from convinced it would fail as a strategy if he is able to buy one item without the other.
It does say "the agreement must be for the purchase of the whole property" http://www.osr.nsw.gov.au/grants/fhnh so unless the Parking was somewhere off site on a different Title, I'd be inclined to see it as
d̶o̶g̶g̶y̶ dodgy.
Especially when you see that the amounts are set just below the threshhold, and the Garage can't probably be independently ever seen to be worth $111,000.
This. See section 25 of the NSW duties legislation: http://www.austlii.edu.au/au/legis/nsw/consol_act/da199793/s…
Thanks. The relevant part says if the transactions are from the same party within 12 months, so it does look like there is no wiggle room to try this approach.
Also first home buyers stamp duty concession can only be used once, so not on two transactions, the second contract becomes a second purchase and no longer first home. I would further be concerned that the garage attracts no concession at all since technically it isn't a home. You would need to look further into the though,
Even if it did work (which it won't, due to aggregation of duty rules noted above), the contract for the garage would still be liable for duty of ~$2400.
Your friend is no doubt being fed a heap of crap by the dodgy real estate agent/developer claiming it can be done, but when he talks to his solicitor or conveyancer he will realise it can't.
There are also rules against tax avoidance schemes, which this is.
Well, first of all, if doggy, need kennel, not a garage. Woof.
Dodgy?
But second, it doesn't sound like a good idea to me to split the transactions (although you can see what they are trying to engineer).
If your friend wants to walk away from Contract #1 for the Unit or their circumstances change does that mean that Contract #2 for the Garage is automatically cancelled by mutual agreement (or what).