Choosing the correct ownership structure when purchasing a property is extremely important to consider prior to signing a contract.
The purchasing entity can be an individual or a company. This may be in its own right, or as the trustee of a Trust (such as a Family Trust) or Self-Managed Super Fund.
We strongly recommend seeking advice from financial or tax advisors prior to entering any contract to ensure that the right decision is made. Not doing so at all, may mean that opportunities to minimise taxation may be lost and rectification (by transfer to the correct entity after settlement) would incur Transfer Duty again.
Seeking such advice only after entering the contract, but before settlement, may allow rectification, but it is not quite as simple as amending the contract. Doing so would be considered a dutiable transaction by the Queensland Revenue Office, incurring Transfer Duty (a second time). A Deed of Rescission and a new (or fresh) contract would instead need to be prepared in order to change the buying entity (without incurring Transfer Duty a second time), however this may delay settlement, incur costs to you and the Seller and requires the cooperation of the Seller (likely by passing on their legal fees to you).
As the old saying goes, ‘prevention is better than a cure’ and that is certainly true here. To avoid issues, make sure the buying entity is clear and correct at the time of signing the contract or contact our office to discuss the best options.
Are you looking to sell your home in Queensland or Victoria? If so, don’t hesitate to reach out. Ownit provides seamless and stress free conveyancing to buyers and sellers!
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