THE simple one, or the better?
Napier & Blakeley strongly recommends the Better One.
The SRO in Victoria allows two methods for calculating stamp duty for Off the Plan Sales for development projects:
1. Fixed method
2. Alternative method
The government introduced the Fixed Method to simplify record keeping. In a Neat Trick however, the Fixed Method brings in more revenue to the SRO.
As the Fixed Method is much simpler to calculate, it is adopted by many developers as it saves paying a consultant to assess the Stamp Duties under the Alternative Method.
At Napier & Blakeley, we consider such a short-cut to be counter productive as it can reduce the purchaser’s spending power and thus reduce the developer’s returns.
Example 1
An example of such a project was a high rise residential development in Docklands prior to construction commencement, with a typical purchase price of $1.3 million. Stamp Duty payable under the Alternative Method was $6,371 less per apartment, than that payable under the Fixed Method.
Over 100 apartments, this saving is $637,100 for the purchasers. The developer quickly modified their pricing structures to capitalise – in part – upon the purchaser’s additional spending power.
The N&B fee was miniscule and there was more profit to the developer!
Example 2
As a sales strategy, the developer offered to absorb the stamp duty costs for all apartment buyers who bought prior to construction commencement.
The developer had done their numbers using the Fixed Method and were happy enough. Just in time, N & B were appointed to assess the Stamp Duty savings via the Alternative Method. Our assessment placed $247,000 into the pocket of the developer making them even happier.
The N&B fee was miniscule and there was more profit to the developer!
We are more than happy to discuss the opportunities that may lie with your new developments with regards to Stamp Duty calculations.
Please contact either John Mathew or William Lee for more information :
John Mathew
National Director
03 9915 6305
William Lee
Consultant
03 9915 6347
wlee@napierblakeley.com
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