Can I avoid stamp duty & What should I do when buying a place?

1. I'm buying my second IP so no longer have the first home buyers privileges.

I've found a property I quite like and feel good about, however it's literally stretching the limit of what I can afford. It's about $100k more than I was wanting to spend, but I feel the extra cost is justified and worth it.

Chances are I'll be able to scrape together the 20% deposit, but I just noticed that stamp duty is going to be about another $15k.

Now I know I can just add the $15k to the total cost and borrow it and only require 20% at the end of the day, but I'm just wondering are there any loopholes or is there anything that can be done to avoid paying stamp duty?

For example, my sister would still be entitled to the FHOG and exemption from stamp duty etc. Would it be possible/legal to buy the property in her name and then have her transfer it over to me afterward? Or sell it to me for $1? Or 'gift' it to me?

2. My first IP was a very quick thing, got in at the last second and really didn't have time to do any checks or anything. Put simply my offer was accepted, I gave the deposit, walked up the rd from the real estate agent and paid the conveyancer to do whatever it is they need to do and had mortgage choice sort my loan, basically X weeks later I had my first apartment.

This time round, seeing as I'm spending a lot more money, double basically - I'd just like to make sure I do everything right. Is there anything I should do before buying?

I've been told I don't really require an inspection because all that should be covered in the strata report, which my conveyancer will take a look at?

Thanks guys, I'll keep you all posted on whether or not I go thru with the purchase.

 

Done a little research and spoken with a mate.

I've been told that there's no real way for me to avoid paying SD - Even if I were to buy it in my sisters name, when it came time to transfer it into my name the SD would have to be paid.

Hypothetically tho, if she were to buy it and then I were to purchase it off her for say half the price, to pay half the SD - Would that be ok? Or is that illegal?

 

Hi Sk3tChY, to my knowledge & as I have experienced in my property purchase, stamp duty can not be added to the cost of the loan.
You'd still be better off to have an inspection. You will be spending huge sums of money and not everything will be covered in the strata report. Your gut feel will pick up the missing pieces when you inspect it yourself.

 

Stamp duty is charged at market value.

You could buy it in her name as trustee for you and then transfer it later with nominal stamp duty, but you wouldn't get the FHOG or exemptions. This is a bare trust.

 

How is this worked out though? I'm guessing someone like a quantity surveyor would determine the market value of the property, but who/where is this carried out?

Or is there some law where you MUST get a property valued by a <insert person> before selling?

By "nominal stamp duty" I'm assuming you mean as little as possible.

I can't really see the value of property dropping though, so if stamp duty is based on market value I may as well just pay it in the beginning while it's lower.

 

If the property is located in NSW the OSR would insist on a valuation if the property is being transferred between family members.

Nominal stamp duty would be about $20 or $50.

 

Ahhh ok, got it.

What?! How does this work?!

Also if I setup a trust, wouldn't that mean she wouldn't get the FHOG etc.

 

In NSW it could work under s55 Duties Act
DUTIES ACT 1997 - SECT 55 Property vested in an apparent purchaser

But this would complicate things for finance.

FHOG not available for trustees.

 

or

s57
DUTIES ACT 1997 - SECT 57 Property passing to beneficiaries

$50

 

Even after reading those links, it's still a little complicated..

Could you explain it a little in laymen terms? I still don't get what you mean.

My only understanding is that if I bought it in a trust, I wouldn't get her first home buyer benefits even if my sister was part of the trust - So I'd still have to pay stamp duty.

If I bought it the property in her name though, when I transfer it to my name, I'd have to pay stamp duty.

What are you saying exactly?

 

It could be possible for your sister to purchase a property as trustee for you and to later transfer the title of that property for you for a nominal stamp duty amount of $50.

But, you wouldn't be able to get the FHOG using this method. Financing may also be a bit more difficult.

 

But wouldn't stamp duty still need to be paid on the purchase?

Also wouldn't this mean I'd have to set up a trust etc?

I'm guessing if we wouldn't get the FHOG then we also wouldn't get the stamp duty exemption - So how/where/why wouldn't we be having to pay stamp duty?

 

Yes stamp duty in full on the purchase.

The discussion has veered off course a bit. It went down this track because you asked about buying it in your sisters name and then transferring it to yourself later.

This is possible, but wouldn't achieve what you want - you cannot have the cake and eat it too!

 

Yeah, such a shame.

Annoying how the government taxes/charges you almost all the freaking time.

Arwell, thanks for the help terry.