Buying a house on the Gold Coast isn’t just about paying what’s on the property’s price tag.
1. Who’s Buying it?
If you’re reading this, it’s probable that you are considering buying a house or property. But how? Will you buy it in your personal name? Under a company? Maybe through a trust? Before you decide, it’s important to know the benefits and consequences of each.
2. Is it on the Water?
Firstly, congratulations – sounds like a beautiful home. With beautiful homes comes responsibilities, including:
- an obligation to disclose the operation of Local Law 17 and how it affects the property;
- maintenance of a certain type of structure (such as a revetment wall, platoon, jetty etc.) and obtain regular reports its condition.
The seller should include a special condition in the contract that discloses the operation of the local law.
However, Buyer beware – since June 2017, you cannot terminate a contract for the seller’s failure to comply with this requirement.
3. Is it New?
Or in other words – is GST payable?
A property is “new” if it has not previously been sold as residential property or is the construction of a new building (including replacement of a demolished building on the same land).
- new apartments,
- newly subdivided land lots; and
- house and land packages sold under a single contract.
The seller must give the buyer a notice at least 14 days prior to settlement which indicates whether GST withholding applies, how much, when it is to be paid and the seller’s ABN.
If GST withholding does not apply, the seller must give the buyer a notice that there are no withholding obligations. A seller can expect to incur a substantial financial penalty for failing to give a buyer the notice as stated above. However, since 2018, it has been the buyer’s responsibility to pay the GST directly to the ATO.
If GST withholding does apply, the amount of the GST will be 1/11th of the contract price or 7% of the contract price (if the margin scheme applies).
If the buyer does not withhold the GST amount at settlement, they may be required to pay the GST component of the sale. This may be a significant cost, so be sure to check with your conveyancer if you think the property is “new”.
4. Is it More than $750,000?
If you are paying more than $750,000 for a house, residency becomes relevant.
Your solicitor must obtain a Foreign Resident Capital Gains Withholding Clearance Certificate before settlement. If this certificate is not provided, and the seller is foreign, you will be required to withhold 12.5% of the purchase price to the ATO.
The foreign seller will only receive their entitled amount through a tax return.
5. Do I Need Any Special Conditions?
If you are buying a house or property, you want to ensure that you have your i’s dotted and your t’s crossed. Whatever your situation, there is a special condition that can help protect you if worst turns to worse. Here are a few examples:
- New contract is subject to sale of buyer’s current property being sold and going unconditional
- Subject to early release of deposit to seller prior to settlement
- Subject to pet being approval by the body corporate
- Subject to the sale of your current property
- Subject to buyer’s due diligence (i.e. body corporate search, flood search, town planning etc.)
- Subject to seller receiving a better offer (sunset clause)
- Agreement to sign the contract by way of electronic means & transmission
- Subject to inspections of property such as building and pest inspections
- Subject to payment of agent’s commission being released early
- Notice that the property is subject to local law 17 (maintenance of works in waterway areas)
- Subjection to seller allowing early possession of property
- Subject to approval of a current non-approved structure on the property
- Subject to the body corporate allowing a home business to be operated from the residence
- Subject to the buyer’s right to access property prior to settlement to start renovations
- Subject to the seller buying a new property
- If the buyer is a foreign person, subject to approval from the Foreign Investment Review Board (“FIRB”)
6. Is there a Pool?
If you are buying a house with a pool or spa, a pool safety certificate must be obtained from a licensed pool safety inspector prior to settlement.
It is the seller’s obligation to provide a pool safety certificate:
- upon signing the Contract;
- upon the building and pest date (if applicable);
- if there is no building and pest date, 2 business days prior to settlement.
If there is no pool safety certificate, the seller must issue a Notice of no pool safety certificate either before entering into the contract of sale or before settlement.
If the property sells without the seller providing a certificate, you will have 90 days from the settlement date to obtain a pool safety certificate and you will be liable for any costs associated with achieving compliance.
Certificates are valid for:
- two (2) years in private non-shared households, or
- one (1) year if it is a pool within a body corporate.
Failing to register and certify your pool can result in an on-the-spot fine of $235.60 or a maximum penalty of up to $2,356 if a complaint is made.
7. Is there a Tenant?
Is the property currently subject to a tenancy agreement? And if so, which type?
- Periodic (weekly, fortnightly, monthly); or
- fixed term lease agreements (where the tenant has a specified time to lease the property with a start and an end date).
You must ensure that the seller gives appropriate notice to their tenants before settlement.
For fixed term agreements: Unless agreement between the parties, a tenant cannot be made to leave the property during a fixed term agreement without an order from QCAT.
For periodic agreements: If the agreement is periodic i.e. weekly, fortnightly or month to month, the seller can evict the tenants if they give them four weeks’ notice. The settlement date must accommodate for this period of time. Note: sellers often don’t give notice to their tenants until the Contract is unconditional.
This advice is general in nature and we recommend you seek the advice of an accountant and financial planner for a better assessment of your ideal structure. We like to take care of our conveyancing clients by giving them thorough, detailed and informed advice and competitive rates.
If you are buying a house in Queensland, we can help make this exciting decision a smooth transition. If you are buying a house in Queensland, we can help make this exciting decision a smooth transition. Please contact Lynn & Rowland Lawyers on 07 5562 0444 or email firstname.lastname@example.org.