ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN AUSTRALIA]

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covers services provided by PEXA, which include pre-population of land registry data, lodgement verification checks and the use of the PEXA platform. The PEXA fee varies depending on the transaction. Stamp duty payable on acquisition of land (or an interest in land) If you acquire property in Australia, each State and Territory requires ‘stamp duty’ to be paid on the acquisition. Stamp duty is charged at a flat rate or an ad valorem rate (based on the value of the transaction). The rate of duty payable on a property acquisition varies between each State and Territory. It can also depend on whether or not you are an ‘owner - occupier’ or an investor. In some cases , the location and nature of the property (whether rural or suburban) can affect the rate of duty payable. The timeframe for paying stamp duty varies for each State and Territory and there are various stamp duty concessions and exemptions available. Generally, stamp duty is payable by the purchaser. It is important to understand how much stamp duty is payable in any property transaction and to obtain legal advice. Depending on the State or Territory, you may be able to apply for a stamp duty exemption or reduction. This is generally where there is no change in the underlying ownership. In Australia, first home buyers can apply for a stamp duty concession and in some States, pensioners can also apply for a concession. Higher rates of duty are payable on property acquisitions if you are a foreign purchaser. A higher rate of duty will be imposed on trusts with foreign beneficiaries who purchase property. Landholder duty Each State and Territory has its own landholder duty regime, which imposes duty on certain

acquisitions of interests in companies and unit trusts that own land. A landholder is generally a company (private or public) or a unit trust scheme which has land holdings of a minimum threshold value, which varies amongst each State or Territory. What constitutes landholdings is broadly defined and depending on the State or Territory includes interests in land (including leases), fixtures on the land or fixtures held separately on the land and may include certain rights in relation to the land such as mining tenements and derivative mining rights. In Victoria, economic entitlements in relation to the land can constitute a landholding. A landholder may be entitled to land in different ways by direct ownership (e.g., registered proprietor), indirect ownership (e.g., constructive ownership) or deemed ownership (e.g., uncompleted agreements). The acquisition of an interest in a landholder which is subject to the regime has to satisfy a threshold requirement before duty is payable (e.g., constitute a significant interest). Exemptions or concessions may apply for landholder duty if the acquisition is due to a corporate reconstruction or consolidation. Duty is charged at the same general rate as if it were an acquisition of the real estate held by the landholder. Liability for payment of landholder duty varies. In some States, liability for landholder duty is joint and several between the acquirer and landholder. In other States, landholder duty is payable by the person who makes the acquisition. It is important to seek legal advice. Economic entitlements Landholder duty in Victoria on economic entitlements has impacted developers and affected how development agreements are drafted. When the economic entitlement provisions were introduced, they were limited in their application and only applied where the landholder was a private company or a unit

ILN Real Estate Group – Buying and Selling Real Estate Series

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