BEEN OFFERED A REBATE OR AN INCENTIVE TO BUY A NEW APARTMENT IN QLD?
In Queensland sometimes to encourage sales, developers may offer a rebate (or other incentives such as gift cards or the payment of your transfer duty) if you meet eligibility criteria, such as settling by a certain date.
Whilst this can seem like a good deal, it’s important to be aware of a number of traps:
1. Higher transfer duty
A rebate does not change the purchase price. The Queensland Revenue Office uses the consideration amount when assessing the transfer duty payable, so transfer duty is still payable on the full purchase price, disregarding any rebate.
2. Duty to disclose to government agencies
Both the Buyer and Seller have a statutory obligation to notify details of the sale to various state authorities. The Titles Registry, the State Valuation Service and Queensland Revenue Office have advised that rebates should be disclosed on the Form 24 and Form 1. The State Government uses the notified information to, among other things, determine unimproved land values for taxation purposes. A failure to properly disclose this information may amount to an offence.
3. Duty to disclose to financier
A Buyer has an obligation to disclose any rebates to their financier. A Buyer has a legal obligation to act in good faith when applying for finance and failure to inform a financier about a rebate may amount to fraudulent conduct. A financier may be misled as to the true price and/or a Buyer’s equity in relation to the value of the property.
4. Solicitors have a professional obligation to disclose
As solicitors, we have a professional obligation to notify financiers and state authorities of any rebates or incentives.
5. The developer could be sued for misleading and deceptive conduct
A systemic practice of providing substantial rebates could amount to misleading and deceptive conduct with respect to purchases of other lots in a project where previous sales figures are provided without full disclosure of incentives or rebates previously given.
