practitioners, conveyancers, and 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. PEXA as a platform has its limitations, but it is still evolving and will continue to develop. This means that in some cases the parties are required to complete their standard conveyancing process outside of PEXA (i.e., contract reviews, ordering of property certificates, preparing the statement of adjustments). 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. Some real estate agents offer a ‘flat fee’ or ‘fixed fee’ service. It is becoming common for buyers to engage agents as buyers’ advocates. 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. Discounts are available in certain circumstances. 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 The Victorian government is currently reviewing the imposition of the Windfall Gains Tax to be payable by owners of land where there has been an uplift in the capital improved value of the land as a result of a change in the zoning of land. This is expected to be in operation from 1 July 2023. 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. A foreign resident vendor can claim a credit for the foreign resident capital gains withholding payment by lodging a tax return with the ATO. Australian resident vendors can avoid this requirement by providing the purchaser with a clearance certificate. The withholding obligation applies to both Australian resident and foreign resident purchasers.

ILN Real Estate Group – Buying and Selling Real Estate Series

Made with FlippingBook Online newsletter