THE FINER details of the imposition of stamp duty on vendors of investment real estate, highlighted in the NSW Treasurer’s recent mini-budget speech, were thrashed out by the NSW Law Society and the Office of State Revenue (OSR) last week.
Leading law firm Minter Ellison also asked a few questions of its own about the changes, arguing that critical detail on commercial property was missing from the proposal.
Having been invited by the OSR to help sort out the issues before the announcement could be drafted into legislation, the Society said clarification was needed before changes could be implemented, according to John McIntyre, chair of the Property Law Committee of the Society.
The Society was not prepared to comment on the policy decision behind the Treasurer’s announcement, but McIntyre said a number of definitional problems had already been identified.
“We are told that everything other than your principal place of residence or your farm qualifies as an investment property. But what if you own your own business premises? Does a sale of premises bought to conduct your business qualify as an investment property for the purpose of the new tax?” McIntyre said.
“What if you buy another house before selling the one you live in? If there is a period after you move out of the old house and before you sell it, does it attract investment stamp duty?”
Another issue that would arise would relate to a home that had been both a principle place of residence and a rental property over many years and whether there would be an apportionment of tax on this, McIntyre said.
Also, it should be asked whether deceased estates which include a home that has been a principal place of residence would have a period in which they could be sold without attracting the new tax.
Minter Ellison acknowledged the changes were “far reaching and will affect the commercial property market in NSW”.
But more detail was needed, Minters claimed. For example, how will developers or persons making substantial renovations to property be treated? And also, what were the transition rules? The firm noted a start date of 1 June this year had been identified by the Office of State Revenue.
Minters said it was hoped these and other issues would be clarified “sooner rather than later so that those in the commercial property sector can fully understand the effects of these changes on their business”.