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Vendor Duty - New charge on land-rich entities |
A new vendor duty on sales of an interest in a 'land-rich landholder' has been imposed retrospectively from 10 November 2004. |
The new charge follows the introduction of vendor duty on the sale of some classes of property in NSW on 1 June last year, and is in addition to land-rich duty already payable at rates of up to 5.5 per cent by a purchaser who makes a relevant acquisition in a land-rich landholder. |
Vendors disposing of an interest in a land-rich landholder are now liable to an additional duty at 2.25 per cent. |
A vendor will be caught by the new duty if they have a significant interest in the landholder, or had such an interest anytime within the three years preceding the sale. |
The duty doesn't apply if the disposal follows an agreement entered into before the date of the budget announcement last May. |
A landholder is land-rich if they have land holdings in NSW with an overall value of $2 million or more, and their land holdings everywhere, whether inside or outside Australia, total at least 60 per cent of the unencumbered value of all their property. |
A landholder can be a private company, a private unit trust scheme or a wholesale unit trust scheme. |
The relevant criterion for the imposition of duty is the size of the interest held by the vendor, rather than the size of the interest disposed of. |
Some transactions will now be subject to land-rich duty which were not previously. |
There are exemptions; for example where the transfer of land would have been exempt from vendor duty by virtue of an exemption for farms, improved vacant land, and new or substantially new buildings. There are also exemptions which correspond to those currently available for land-rich purchaser duty. |
Significantly for the property industry, there is a lack of exemptions for the syndication of interests in a unit trust scheme. |
