Dont Get Hit With Stamp Duty Twice!
You might have considered using the term, and/or nominee when buying property. Putting Joe Bloggs and/or nominee on the contract of sale generally means you can transfer the property from your name to another entity (eg. another person, business or trust) before settlement.
Why would you do it?
Generally for tax purposes. Your accountant might advise you that it makes better tax-sense to put the property in your spouses name, or in the name of your business or trust. Its sort of like hedging your bets if youre not sure which entity should buy the property at the crucial moment when you have to sign the contract.
The vendor (seller) has to agree of course. Both the vendor and the original purchaser have to sign the transfer document, which basically substitutes the purchaser. Typically theres no problem getting the vendor to agree – theyre still getting paid.
But heres the kicker – the entity you transfer to (the nominee) must be related to you. Otherwise you get hit with stamp duty twice.
Under the Duties Act, being related doesnt just mean by blood or marriage. Yes, you could transfer to your spouse, de facto partner, sibling, parent or child without paying double stamp duty.
But a person and a company are also considered to be related; as long as the person is the majority shareholder or director of the company theyre transferring the property to (or vice versa).
The same goes for transferring between a person and a trustee, as long as the person is the beneficiary of the trust. Or between a private company and a trustee, as long as the company (or a majority shareholder or director of the company) is a beneficiary of the trust.
You can also nominate a company or trust that doesnt yet exist.
But all of the parties have to be related. For example, if two people (x and y) jointly purchased a property using and/or nominee and then wanted to transfer it to xs dad, theyd have to pay stamp duty twice because xs dad and y arent related.
Something else to note is that the purchase price cant change with the transfer. Otherwise its seen as the purchaser on-selling for a profit – that means double stamp duty.
And you should be aware of the dangers if the nominee doesnt comply with the terms of the sale contract. A vendor will usually require that you, as the original purchaser, guarantee (on paper) that the nominee will comply with the terms. And you actually remain liable under the new nominated contract, meaning if the nominee breaches the terms, the vendor could come after you.
While there can be advantages to using and/or nominee, just be aware of the pitfalls.