10 Apr Twist to stamp duty for “off the plan” sales
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.
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If you are interested in purchasing a brand-new property off the plan that completes within 6 months please contact Wood Property Partners.