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Twist to stamp duty for “off the plan” sales

Twist to stamp duty for “off the plan” sales

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The changes to Victorian stamp duty laws coming into effect on 1st July will shake up the investment metrics of buying a new apartment “off the plan” vs buying an existing apartment.

For the next 10 weeks (up to 30 June) you can buy an “off the plan” apartment and avoid most of the stamp duty payable on a completed property. After that time, both “off the plan” and existing property sales will attract stamp duty.

There are many advantages to buying a property off the plan but one of the big ones is about to disappear so if you have been hanging back thinking about it, time is up, and you now need to act. Developers are also keen to secure contracts pre June 30 and are some are even sweetening the deals.

Now there is a third option appearing in the market which is “nomination sale”. This is where the buyer of an “off the plan” apartment on-sells their apartment before it is completed or settled. They do this by nominating the 2nd buyer as the purchaser under the original contract. As the property is a lot closer to completion the 2nd buyer doesn’t need to wait as long.  The 2nd buyer takes on the benefits and obligations of the 1st buyer. In many instances, the nomination is subject to approval by the developer. The sale price is negotiated between the 1st and 2nd buyer and depending on the property may be more or less than the original purchase price.

The interesting thing about a nomination sales is there are about 2 years worth of contracts that pre date 30 June 2017 and it will be interesting to see how the State Revenue Office treats the stamp duty obligations of a nominated contract that is dated pre 30 June 2017 but nominated post this date.

Please comment or add detail if you know more

If you are interested in purchasing a brand-new property off the plan that completes within 6 months please contact Wood Property Partners.

8 Responses

  1. I am interested to know how the SRO will know the contract date – i.e. what is to stop a developer and buyer post dating a contract for a project that starts say May this year, contracts in August and is predated to June? The SRO has no visibility to contract dates and they are not registered anywhere. Perhaps they will simply wear this risk given that it is only a transitional, not permanent issue.

  2. Thanks David – SRO or ATO can audit contracts of sale or nominations and align the date of the contract with the date of the deposit being paid.

    Hope that helps

  3. Hi Andrew I am looking to buy a apartment sale by nomination in Vic. The original buyer contract date was Oct 2017. The price was approx 550k with 24 percent going towards the land. I am a investor.. what will be the stamp duty that I pay since the laws have changed regarding stamp duty?

    1. Hi MHk – Did you end up buying this apartment. The answer to that question depends on a number of things. Are you local or foreign citizen? What are all the conditions of the original contract? I see you are an investor but that sounds like a question for your legal or accounting advisor to ensure they fully understand all then detail.

  4. Hi there.,

    Thank you for the post , it’s great information. Can I please ask for the nomination of sale for off the plan developments as below, hope you can help.

    1)must the new buyer be a citizen of Australia
    2)can the nomination be done before the property is built or if building has commenced but not completed as yet
    3)would stamp duty only be calculated once the property has been built and settled
    4)is there penalty fees that will for a nomination sale

    Many thanks for your help with this

    1. Hi Mikal – All really good questions but with the complexity of tax laws in Australia they are all questions for your solicitor I’m sorry.
      Hope you get the advice you need.

  5. We are looking at buying since the boost was announced and have come across a townhouse for nomination we like.

    Is it they date the nomination is accepted and deed signed to take over the contract or the date the original purchaser signed.

    This date seems to be worth 25k

    Any help
    Would be great.

    1. Hi Daniel – The original date of contract is just that. The nomination date is the date that contract is nominated across to you. ie – The date you as the nominated purchaser signs.
      Hope that helps.

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