Having surveyed those in the property development industry for many years, the only thing that developers seem to dislike more than paying stamp duty, is paying stamp duty twice on the same property.
Although this may arise in a variety of circumstances, the most common is when a developer that has completed the purchase of property in one entity wishes to subsequently transfer that property to another entity. This often occurs when:
- a developer moves quickly to acquire a property and uses an existing entity which they later decide may have too many inherent risks (historical trading etc), or
- the entity used, already owns existing property and putting all their eggs in one basket is an unnecessary gamble.
Fortunately (if the developer has an appropriate legal structure in place), an exemption from NSW stamp duty may be available for both the transfer of property and the transfer of interests in property (shares or units) between entities that ultimately have the same owners. As with all exemptions, the devil is in the detail and understanding the sequence of steps required to give effect to the transfer is vital.
The exemptions are known as ‘corporate consolidation’ and ‘corporate reconstruction’ transactions.
This article includes:
- Corporate consolidation
- Corporate reconstruction
- Practical application