[BUYING AND SELLING REAL ESTATE IN AUSTRALIA]
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financial institutions to prepare, lodge and register land registry documents and effect property settlements online in real time. Using PEXA has led to a significant reduction in the manual processing of paperwork by allowing land registry documents to be lodged electronically. PEXA also facilitates the transfer of funds in real time. Agents It is common to engage a real estate agent when selling property in Australia. Real estate agents must be licensed and will require the vendor to execute a sales authority or agreement. Each State and Territory has its own legislation which governs the real estate industry. If a real estate agent is engaged, the vendor will be required to pay the agent a commission as agreed in the sales authority or agreement. A common structure can be negotiated. The trigger for payment of the commission is usually when the contract becomes unconditional. The vendor will also be required to pay advertising and marketing costs associated with the sale of the property. Consultants frequently engaged The types of consultants commonly engaged in property transactions from time to time include builders, building surveyors, land surveyors, environmental and geotechnical consultants, town planners, valuers, feasibility analysts, architects and engineers. In addition to these consultants, it is also important to obtain legal and accounting advice. Capital Gains Tax Generally, tax is payable on the capital gains made from selling property. However, this does not apply to gains made from the sale of a principal place of residence. Death duties Australia does not have a death duties regime.
Windfall Gains Tax A windfall gains tax (WGT) will apply to land that is rezoned resulting in a capital improved value uplift of more than $100,000. The WGT is 50% or 62.5% depending on the value of the uplift. The liability to pay WGT is incurred by the landowner when the rezoning occurs. However, payment of the WGT can be deferred until the earlier of: • a dutiable transaction (e.g. a transfer of the land affected by the WGT);
30 years after the rezoning; and
•
• a relevant acquisition in relation to a corporate or unit trust landholder. IMPORTANT FOREIGN INVESTMENT CONSIDERATIONS Foreign resident capital gains withholding Foreign resident capital gains withholding applies to vendors who sell certain taxable property under contracts entered into from 1 July 2016. It applies to sales of property where the contract price is $750,000 or more. The tax rate is 12.5%. It imposes an obligation on purchasers to withhold 12.5% of the price at settlement and to remit it to the ATO if the vendor is a foreign resident. Foreign Investment Review Board – foreign purchasers The Foreign Acquisitions and Takeovers Act 1975 (Cth) (“ FATA ”), Foreign Acquisitions and Takeovers Regulations 2015 (Cth) and the Australian Federal Government’s specified Foreign Investment Policy provide the framework for dealing with a “foreign person” or a “foreign government investor” who propose to purchase property in Australia. Depending on the type of property being purchased, if you are a “foreign person” for the purposes of FATA, you must apply for foreign investment review board (“ FIRB ”) approval
ILN Real Estate Group – Buying and Selling Real Estate Series
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