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May 25

Don't get whacked with stamp duty if your deal falls through!

Do you know you can be whacked with transfer duty even if you don't proceed with a property purchase?

That's right. Your liability for transfer duty (ie stamp duty) arises when you SIGN A CONTRACT to buy a house or other dutiable property, not when you proceed to settlement.

Exemption is available for cancelled transactions but you have to apply for it.

But the exemption is not automatically granted in all circumstances, as it needs to be cancelled on relevant grounds under the Duties Act.

There are lots of relevant grounds but the most common, probably comprising over 90% of cancelled transactions, is that finance was declined.

So this means if you don't get a finance decline letter and supply it to your conveyancer (settlement agent or solicitor) you will remain liable for thousands of dollars of transfer duty even if you don't proceed to settlement.

Hopefully this will explain why conveyancers get very annoyed with real estate agents, brokers, bankers and buyers who don't supply finance decline letters. It just involves us in a huge amount of extra work that we never get paid for. 

Or a legal bill to the buyer for a lawyer to write a submission to the Commissioner of State Revenue. 

To work out what the transfer duty liability is use the Department of Finance's Duties Calculator at https://rol.osr.wa.gov.au/Calculators.

 

DISCLAIMER: The above advice is intended to provide a summary and is not intended to be relied on in any particular case. It should NOT be construed as legal advice. For detailed advice specific to your circumstances you should seek specific advice from an appropriately qualified professional.

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