Browse Forums Real Estate 1 Feb 20, 2010 12:33 pm Hello all, I am renovating my Sydney home and then I want to house swap. It is half a house on strata title, ground level. There are two middle aged ladies next door, one of whom is fairly handy and does the maintenance work so body corporate costs are really cheap. Once I'm done inside painting and polishing the floorboards, I intend to house-swap. I need a bigger place because I'm going to have a family one day and need more than 2 bedrooms. I reckon I will be able to find an older person in the same area who might want to downsize. The difference in property value I will make up with cash. Now I am going to land titles search houses I want to buy and ask the owners if they will house swap, instead of selling on market and buying on market. I reckon this will be a great thing to do: if we can agree to swap our houses we can sell to each other at half price. This will reduce our CGT It will eliminate real estate agent's fees And it will reduce stamp duty. These costs are a real barrier to living in the home you want and the taxes are nothing but Government theft. That is why they pump up the property market all the time with immigration, to keep the costs high so they can get their money in CGT and stamp duty - also land tax is calculated on sales data from the area so that depends on it too. I can think of nothing better than not giving the Government any more of my money than is fair and necessary. So I want to find someone and house swap. Has anybody done this? Does anyone out there know the rules around it? We are not a free market any more , people cannot just sell their house to someone else for $1 like in the old days families used to do for their kids. Does anyone know what the rule is now? cheers! Re: house swap: minimise CGT, stamp duty and no agent fees 2Feb 20, 2010 12:42 pm Not a good idea at all imho. Best to ask your accountant/solicitor/financial advisor. Mrs B Re: house swap: minimise CGT, stamp duty and no agent fees 3Feb 20, 2010 12:44 pm ^^ and that ...nice idea...but.. You need to read the rules If you were living there then there is no CGT so I take it you don't live there, ...but you are working on it. So I see you want to avoid a CGT 'trigger'... unavoidable i think. Soon as you adjust the titles.... Where you are coming from is where you are going to... Re: house swap: minimise CGT, stamp duty and no agent fees 4Feb 20, 2010 2:28 pm Quote: We are not a free market any more , people cannot just sell their house to someone else for $1 like in the old days families used to do for their kids. Well, you can if you want to - what you cant do is avoid CGT by deals like this. We had a unit which we had as an investment property for 6 years and then sold it to our son - we were advised that if we sold it for under value we would still be charged CGT on market value. In other words you cannot sell it for $1, pay CGT on $1 and then receive the rest of the money from the buyer as a tax-free 'gift'. We were advised that as long as we sold it for over the water rates valuation we would not be questioned on this - they are notoriously low (at least they are in SA) but the govt can hardly argue with its own valuations - we sold it for slightly over this which was still aprox $30k under true market value, paid CGT on the selling price and had no hassles from the tax dept. We did not pay agent fees, just arranged a private sale thru a conveyancer. Re: house swap: minimise CGT, stamp duty and no agent fees 5Feb 24, 2010 6:57 am thanks a lot for your replies, Especially you, Adelaide Crows Supporter That is tremendously interesting about the water rates valuation I don't think they value the house for water rates here but they do for land tax. Land tax gets calculated on the average of all the recent sales in the area and they are sure to cherrypick the highest ones so they get the most money back! Did you find your stamp duty bill was less because you sold it for just above the water rates valuation? Re: house swap: minimise CGT, stamp duty and no agent fees 6Feb 24, 2010 7:48 am In SA the value of your property (as determined by the govt valuer) is shown on the water/sewer rates and your rates calculated accordingly. You can challenge the valuation if you believe it is too high but they are almost always under real value. Seller does not pay stamp duty in SA - buyer does but I think first home owners are exempt up to a certain value - from memory son paid little or no stamp duty, at any rate the FHOG covered all costs like this with bit to spare. Or do you mean Capital Gains Tax (CGT) - obviously we paid a bit less of this by selling at 30k less than true market value - we also saved on agents commision by not selling thru an agent so that partly off set higher price we could of got on open market. Re: house swap: minimise CGT, stamp duty and no agent fees 7Mar 03, 2010 6:27 pm You obviously are not aware of the 6 year rule (google it). You can move out of your PPOR (principal place of residence) for 6 years and rent it or whatever without paying capital gains tax (assuming you don't buy another PPOR). The good bit is that you can move back in for (?? not sure the time) then move out for another 6 years, no CGT. If you do the house swap thing make sure each sign a rental agreement even if no money changes hands. If someone moves in without a contract you can have all sorts of trouble if you want to get them out. Check all paperwork carefully. Re: house swap: minimise CGT, stamp duty and no agent fees 9Jan 21, 2012 11:37 pm new renovator - It's not that simple. 1. You still need to pay FULL Stamp duty and CGT cost at market price, The ATO may ask for a registered valuer to do a valuation on the place to calculate the Stamp duty amount + CGT amount. You can house swap, but when it comes to swap of ownership; there's def going to be some tax issues and financial lost somewhere. Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: house swap: minimise CGT, stamp duty and no agent fees 10Jan 22, 2012 1:05 am Hi There, It has been a long time since I studied CGT when I qualified 25 years back but I would not be doing what you are thinking. Also just because noone checks does not mean that you are scott free. There are lots of deeming provisions that will assign values and the penalties are stiff especially if it is viewed as a scheme. Lowering purchase prices just defers the CGT to the next sale. I would do what others said, for the house you are renovating you own and are living in it as you mention that it is your house. Selling principle residence is GCT exempt, the old lady would also be exempt if it is her principal residence too. So no need to do all of that as you simply sell your principle residence and buy a new principle residence. Or have I misunderstood...... Cheers Mark Before you rip it up, if you can in the grout lines, drill some holes and pour/inject techgrip by sika. I have used it to bond mdf to timber, but in the process it dripped… 1 4290 Not much in this responce. My suggestion is, what are you looking to build and why. This will all be impacted by the local councils planning scheme. 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