Has anyone here done a deed of partition on a property in Vic or advised about it?
Looking at trying to minimise stamp duty on subdivision (on a potential property I'm interested in buying).
Did a bit of googling and came across this. First time I've read about it.
Of course. Sent a message to my accountant already. But always good to ask on here to see if someone has actually done it and can give any tips from personal experience
accountant /= lawyer
Yeah, but don't want to pay for 2x professional fees so will just pick one! 🤪🤪
@Seraphin7: For your particular question it is inevitable.
If your accountant does actually provide advice, see if they'll provide it in writing. My bet is nope :D
@Typical16-bitEnjoyer: Upcoming post … "Accountant won't provide legal advice … what are my rights?"
@Seraphin7: Lmao, sorry thought you were OP
OP's next post "accountant told me to do something over the phone, did thing, now ATO/SRO is up my ass, accountant now says they did not say to do that thing, what do"
I've always wondered how/if this works in the real world.
Looking at trying to minimise stamp duty on subdivision
Tax Evasion ?
My absolute favourite form of evasion.
I don’t know anybody that doesn’t minimise their tax … Of course I’m minimising my tax. If anybody in this country doesn’t minimise their tax they want their head read. As a government I can tell you you’re not spending it that well that we should be paying extra.
that doesn’t minimise their tax
There are differences between minimising tax, and evading tax. One is legal, the other isn't.
@happydude: ATO make it quite clear that avoidance of tax is illegal. It is clearly defined how they interpret avoidance.
No, just avoiding paying unnecessary stamp. Just say you went in 50/50 on a property with someone. Then later on subdivided. Then if each person wanted their own block and not 50/50 of each sub, you would have to pay the full stamp to buy each other out I think. So on a 1mil townhouse thats a lot. However from what I have read in my quick google today, if this agreement is drawn up then the only stamp you would be paying is on the difference in value between the 2 blocks, if one was slightly more expensive than the other. So say if only 50k difference, then it appears you would be paying the stamp on the 50k difference only, not on the whole 1mill house. Thats a massive savings
Sounds like you need to ask an accredited accountant.
I think more than that. Mine hadn't even heard of it. Will run it past my lawyer mate and find a conveyancer to ask as well
@Sammyboy: Most of the google pages were from lawyers and this is why I posted see a lawyer and not an accountant.
I am not sure if I understand you correctly, or even you are aware of the exact steps that will be involved. But, let me attempt and see if this is what you are after:
1. Buy a property with someone, say value $1 million, your share is 50%. Stamp duty: Both will pay half of the stamp duty on $1 million on purchase. In VIC that would be $55,000, or half of that or $27,500 will be your share. You will potentially miss out on the first home buyer benefits as you may not be able to establish PPR in the property.
2. On sub-division: If not transferred then no stamp duty.
3. On sub-division and subsequent transfer of interest: On sub-division both you and your friend are 50% owners of two lots. If each of you want to have a lot, then you will give up your 50% in a lot to your friend, and your friend will give up his interest in a lot and both will end up with 100%. Stamp duty consequence: You will pay stamp duty on the 50% interest you acquired from your friend. The sub-divided lots usually have higher valuation too. If we assume the value has not changed then, on $500,000 the stamp duty you will pay is $25,070. Sub-division itself in Melbourne would cost you higher than $12,000 (council fees, land surveyor, conveyancers fees and land title registration fees) plus any additional costs to get all utilities on both lots (sewerage and storm water will cost you a packet).
IMHO I don't see how you are likely to gain any advantage. Of course, if it is difficult to get funding and this is the only way you get to buy, then probably these costs may make sense. Just remember, every time property ownership changes either for real or on paper, you will pay stamp duty. Title will need to be registered for these changes to take effect. So, there is really no hiding.
@Sammyboy: The first link talks of exactly what I said, need to pay duties a second time around. Not aware of the options proffered in the second link. Might be possible. But after CGT and GST how much will you benefit would be the question to ask. Mind you the solicitor will also charge you a hefty fee to put together the scheme documents.
Tax and property are very complex affairs. I didn't want to further comment on CGT and GST complications. Forming a trust and buying might help you save on the second lot of stamp duty. But you will end up paying CGT and GST for your own house. I would recommend do good research but property is expensive and any taxes in relation to that will be big numbers.
As a strategy if budget is an issue, buy a resident property for investment. Banks will account for the rental income towards your repayment capability. If these things were easy, most people would do that.
Have a look for town planning consultants with in house lawyers.
As you want combined legal and tax advice see your lawyer as they will be able to give you advice on what you want.