Transferring 50% Share of Property to Another Entity (Conveyancer Says Duty Is on The Whole Transfer?)

Do I need to pay stamp duty on the whole transfer or just on the 50%?

I called a conveyancer and they told me I would need to pay stamp duty on the whole transfer?

Comments

  • +28 votes

    I called a conveyancer and they told me I would need to pay stamp duty on the whole transfer?

    /thread

    •  

      assuming you can trust the conveyancer. You obviously pay more for conveyancing than I do

  • +19 votes

    ozbargain members > Conveyancer

    • +3 votes

      Has more "trust" on OzB advice, than professionals :)

      •  

        was sarcasm anyway.

        •  

          was sarcasm anyway.

          Whoever neg you didn't see it that way (sigh)… I didn't neg you btw.

        •  

          well now I have to remove my upvote, because I definitely rate my investigation > any conveyancer I've dealt with

    • +8 votes

      cmon lads, he's just asking for a second opinion.

  • +3 votes

    You might as well tell people which state/territory it is in (given the laws are different in each one)

  • +3 votes

    More details required as it varies from state to state and also depending on the other entity and why it is being done also come into consideration depending on the state.

  • +4 votes

    Just the 50% IMHO

    •  

      seriously?

      edit: seriously, I feel like your deliberately giving bad advice to say "this isn't the right place to ask", but I'm not sure

  • +2 votes

    Depends what is happening, but you generally pay duty on the value of what is actually being transferred (ie. in this case apparently a 50% share).

    Quite possible the conveyancer is wrong, but really need more details as mentioned a few times above.

  • +1 vote

    OP, if you haven't already, could you not ask your conveyancer to show your the ruling on if you are suppose to pay 100% or a lower rate…

  • +9 votes

    Are you not confused with the fact The whole transfer is 50 percent.

    A owns half an orange, b owns the other half, a transfers it’s half to b.

    The whole transfer amount in 50 percent.

    •  

      hmmm I saw this totally differently. Currently 100% is in the name A & B. Going to change to 0% is owned by that legally entity. 50% is changed to A; 50 % is changed to B.
      If stamp duty is on sale, will be on 100%. If stamp duty is on purchase, stamp duty will be on 50% + 50%.

      I've always been told I would have to pay stamp duty to move a house from joint to a single owner, or a single owner to joint. This is the first I've ever heard of 50% being an option

  • -1 vote

    Could you class it as a gift?

    • +4 votes

      It won't exempt it from stamp duty.

  •  

    This is something you need to run with your conveyancer.

    I did the opposite (receive 50% share from co-owner) and stamp duty was payable on that 50% portion. I suppose if you are giving away share from your 100% ownership, it's possible stamp duty is payable on that 100% portion. Your conveyancer should clarify that.

  • -2 votes

    Yet another shining example of why there should be a time frame imposed before new members can post…

  •  

    i'll do it for 25% let me know and i'll give you my bank details

    •  

      I'll do it for 20%.

  •  

    OP also check what capital gains implications are

  • +1 vote

    To be fair to OP if I was getting charged 100% stamp duty for 50% I'd be questioning it.

    Call your state gov and ask, I don't know the answer.

    • +1 vote

      Yea, especially when that difference can be $20k or higher.

  •  

    Yeah, agreed. Get a new conveyancer, or better hire a "solicitor".

    The other entity only needs to pay 50% of the stamp duty on the value of the whole property. If you are paying stamp duty on the whole transfer, your conveyancer is doing something wrong.

    •  

      Just to clarify, it should be 100% of the stamp duty on 50% (if that is the share being transferred) of the value of the property. ie. you pay full stamp duty on 50% of the value, not calculate stamp duty on the whole value and then half that amount.

      It is an important distinction because stamp duty is generally calculated on an increasing scale, so duty on 50% of the value should be less than halving the stamp duty on the whole value.

      • +1 vote

        I see an opportunity here … buy a house in multiple transactions, like four quarters, to save on stamp duty

        •  

          Unfortunately as far as I know all states have aggregation of duty rules to stop you doing this.

  • +1 vote

    Stamp duty (or transfer duty) is an ad valorem tax.
    In short, that means it is calculated based on the value of the transaction (or the market value equivalent if the transaction is not for full market value).
    If the property is valued at $100, and you transfer 50% for $50, then you should be paying duty on the $50.

  •  

    From what i recall, since my dad was looking at this when considering superannuation/wills/inheritance, is that you are essentially selling it and then buying it back. So you would be paying the full 100% stamp duty

    Again, not an expert, you'd best check with an accountant or conveyancer or lawyer

  • -1 vote

    Too late now, but my advice is to buy property using a company. You will pay stamp duty, but after that, you can transfer it in whole or in part by transferring the shares in the company. States shouldn't be charging stamp duty at all anymore (let alone at huge rates due to property price bracket creep) as it was one of the taxes that was meant to be removed with the advent of the gst. Anyway, back to reality - not much you can do. States are addicted to stamp duty revenues now. Even a mass protest by all voters and citizens would simply mean a gap in state revenue (although state revenue is hugely wasted).

    •  

      Interesting, but what is the administrative cost each year of running the company - even if the only thing it does is hold one asset and does nothing else?
      I agree stamp duty should be abolished. What the ACT is doing is switching slowly from stamp duty to annual property taxes - think of it like state based rates. You have rates for your council that pays for garbage etc, and rates for your state that pays for hospitals and schools. I think all state governments would love to have a broad based (no exemption) property tax, but the transition arrangements are tricky. How do to handle someone who just paid $40k in stamp duty that now has to pay $2000 a year? Do you give them (or the property) a $40k credit, or holiday from paying the annual property tax? It's hard.

    • +1 vote

      You need to be very careful when you buy property using a company. There are various things you need to consider, I use VIC for example:

      1. Landholder duty - if you use a company to purchase a landholding value of $1 mil and more, and if you transfer 50% or more shares, there is still additional stamp duty for the transfer. See SRO VIC Landholder Duty

      2. Land tax grouping - basically if you have multiple companies holding multiple properties, all properties will be grouped together for land tax purpose See SRO VIC Grouping and Land Tax

      3. Fringe Benefits Tax - if associated person live in the property, the company has FBT obligations

      4. Capital Gains - No general 50% CGT discount for companies

      You really need to think twice before buy a property using a company.

    • +2 votes

      You might want to look up 'land rich companies' and related stamp duty provisions before providing financial advice.

  •  

    How do they determine the value of the 50% share of the property? is it based on the council rate?

    •  

      Based on Valuation by property valuers.

  • +1 vote

    If you are transferring a share of the property to another entity, why would you have to pay any stamp duty at all? Isn't it the purchasing entity that would pay the duty, not you?