The purchase of unregistered land by First Home Buyers is still one of the most common transactions I see come across my desk. Despite this, there is so much First Home Buyers don’t know about buying unregistered land. This is a must read for First Home Buyers looking to buy unregistered land.
First Home Buyers – it’s time to stop the confusion and get informed.
Transfer Duty (formerly called Stamp Duty)
Purchase price $350,000 or below?
Zero to pay – full exemption.
Purchase price between $350,000 and $450,000?
Discounts apply – the discounts work on a sliding scale depending on the purchase price. The closer the purchase price is to $350,000, the less you pay.
There is a calculator tool on the Revenue NSW website which allows you to calculate how much duty would be payable, depending on the purchase price of your block of land.
If the purchase price is over $350,000 then an element of transfer duty will be payable. This amount must be paid on the earlier of 3 months after the Contract date or settlement. Remember – settlement doesn’t occur until the land is registered. As such, in the majority of cases, you will be required to pay the transfer duty within 3 months of the Contract date. The Contract date is the date the Contracts are exchanged/entered into. I often find this is a common misconception among First Home Buyers. If I had a dollar for every time someone told me they thought that “apart from the deposit, nothing is payable until the land is registered”, I’d be hundreds of dollars richer.
Purchase price over $450,000?
Full transfer duty is payable – no discounts apply. Again, this becomes payable on the earlier of 3 months after the Contract date or settlement.
The above information only sets out the thresholds. It is important to note that there is criteria you must meet in order to be eligible.
First Home Owner Grant
In addition to the transfer duty exemptions or concessions above, as a First Home Buyer you may also be entitled to a $10,000 grant. The grant does not apply to the purchase of land but applies to the construction of a new home on the land. In order to be eligible, the total property value (including house and land) must be less than $750,000.
You may be able to apply through your bank when they’re arranging finance for the building contract or you can apply for it yourself when construction of the new home is completed.
Time frames for registration
Whilst you are provided with an anticipated date for registration, this date is approximate only and subject to change.
The Vendor doesn’t have control over registration of the land because there are a number of processes that need to be followed involving third parties. Before the land is registered, council must approve the plan of subdivision, construction works must be completed and the plan of subdivision must be lodged to Land Registry Services.
It is because of this and a number of other external factors like weather, that an exact time frame of when the land will register cannot be given.
Generally speaking in a Contract for Sale of unregistered land, there is a ‘sunset date’. This is the latest date that the Vendor has to have the land registered by and is usually longer than the anticipated time frame for registration provided by the sales office.
This is important to consider because as a worst-case scenario you could be waiting until the sunset date. It’s only until the sunset date has passed, that you have any options under the Contract terms.
In most cases, if the sunset date has passed, you have the option to get out of the Contract, get your deposit back and apply for a refund of any transfer duty paid.
For further information please don’t hesitate to contact:
02 4607 2104
*This information is current as at April 2019 and applies to First Home Buyers in NSW
This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.