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New Vendor Duty |
Those selling property in NSW now face a new stamp duty introduced on 1 June this year. Vendors now need to determine whether any sale of property will be liable to the new duty prior to the sale, or whether it may benefit from one of the exemptions or concessions in the new law. |
Vendor duty has to be paid before or at the time of settlement. This means that if the sale is likely to attract vendor duty, you will need to discuss in advance with your solicitor options for payment. These include payment before settlement from your own funds, the release of part of the deposit, payment by Electronic Duties Return, or settlement at a place where duty can be paid at the time. |
The new stamp duty does not apply if you are selling your principal place of residence or selling a farm. Nor does it apply to those selling new buildings suitable for use or occupation which are unoccupied or which have been completed for less than 12 months. The latter exemption gives developers a 12-month window from completion of construction to sell new buildings which have had tenants. |
Where there are multiple buildings on the land, the exemption does not apply, unless all the buildings are new or heritage buildings. |
Subject to exemption, vendor duty at a rate of 2.25 per cent will now be imposed on any transfer, agreement for sale or transfer, or declaration of trust over 'land-related' property. |
There are exemptions where the property is sold at a loss, or at a profit of less than 12 per cent. The duty payable is phased in between 12 and 15 per cent profit. |
However, the concept of profit in the new law is the difference between the original purchase value and the sale value. It doesn't account for improvements made by the vendor, transaction costs or inflation. Thus the actual profit the vendor receives, or whether in fact a profit is realised, is irrelevant. |
The new law also provides exemptions corresponding to some allowed from purchaser duty, such as change of trustee, deceased estates and relationship break-ups. An important area not exempt is a sale by a mortgagee, which is likely to affect lending criteria. |
