When the Taxman wants a bigger slice of the pie – Aggregation of transfer duty
Have you ever thought about buying two or more properties in one complex or from the same seller (one maybe to live in and the other to rent as an investment, or two investments) – beware of the taxman catch!
Transfer duty increases at progressive rates, depending on the value of the property. Where two or more transactions are grouped together, the taxes are to be aggregated (combined) and taxed as one arrangement for the purposes of calculating transfer duty. The effect of this is that the buyer pays a higher rate of transfer duty on the total combined value of the properties, rather than the transfer duty which would be payable on each separate transaction.
The following factors are relevant in considering whether the aggregation rule is triggered:
- If the transactions are both put into the one contract
- If the transactions are put into separate contracts but they are conditional upon the completion of other transactions
- Whether the parties to the any of the transactions are the same or related
- The time frame over which the transactions take place
- Whether, before the transaction takes place, the properties were used together or dependently by the seller; or
- Whether, after the transaction takes place, the dutiable properties are used together or dependently by the Buyer.
If you are unsure if the aggregation rule applies to your situation, you may find the questionnaire on the following link of some assistance: https://www.business.qld.gov.au/industries/service-industries-professionals/professional-financial-services/transfer-duty/self-assessors/interactive-help/section-30
A failure to pay aggregated transfer duty when you have an obligation to do so carries serious consequences including recovery of the unpaid transfer duty and penalty interest. The best advice is to speak to your conveyancing solicitor to understand your transfer duty liability.
If you would like to discuss a potential aggregation purchase, please feel free to contact us.