Conveyancing is the transfer of real property from the vendor (seller) to the purchaser. It is a complex area of the law and not just the filling in of forms. You need to know your rights and obligations in relation to:
- Estate Agents.
- Easements, Planning and zoning restrictions.
- Certificate of Title.
- Vendors Statement.
- Contract of Sale.
- Cooling off provisions.
- Swimming pool fences, encroachment, and adverse possession.
- Builders Warranties.
- Requisitions on Title.
The Personal Property Securities Act 2009 was recently passed making changes to registration of security interests in personal property. When you buy or sell real property (land and buildings) there may be certain consequences relating to personal property (property other than land). Ensure that your contract has made sufficient provision to protect your interests or you could be paying for something that the vendor has no authority to transfer to you.
Buying and selling a property can also affect your taxation position and have major consequences when dealt with in terms of a testamentary will. If a property in a deceased estate is not sold / transferred from the estate within two (2) years from the date of death of the deceased, there could be capital gains tax (CGT) implications. This CGT event may be triggered even if the property was a “main residence” (exempted property) or acquired prior to 20 September 1985 when the CGT provisions were introduced.
It could also have implications as regards family law matters and asset protection measures that may fall within the provisions of the Bankruptcy Act. Since May 2006, trustees in bankruptcy matters may “claw back” money and property going back up to five (5) years. Assuming a property was in the name of a bankrupt’s “related” party or entity (spouse for example), the trustee can recover the money or property where the bankrupt made financial contributions up to five (5) years.
If you are buying or selling an investment property, you should know the GST implications, landlord and lease implications, and the taxation issues relating to negative gearing and capital gains tax. If you are transferring property from one trustee to another or from one individual to another, the transfer may be exempt from stamp duty. But there are stringent requirements to qualify for such exemption.
People establish discretionary trusts primarily for tax benefits, which leads to wealth creation and asset protection. It also provides financial security for family members whilst having the flexibility of income distribution and control.
In a trust, the trustee holds assets on behalf of the beneficiaries. In a discretionary trust, the trustee has the discretion as to which beneficiary receives what entitlement and in what proportion. A discretionary trust is also called a non-fixed trust.
A fixed trust, which is also called a unit trust, has beneficiaries who have a fixed entitlement or interest in the trust fund. There is also a hybrid trust, which is a fixed trust with characteristics of a discretionary trust. A trust deed regulates the manner in which a trustee carries out its duties. Certain beneficiaries in family trusts may be subject to penalty tax at the top marginal rate – “family trust distribution tax”.
Seek legal and financial advice when purchasing or selling property as there may be prudent ways to deal with the issues and look at options to suit your specific needs.
Self Managed Super Funds (SMSF)
You may have property in your name or in the name of your trust. You may be considering to transfer the property to your SMSF. There are tax, stamp duty and additional financial consequences that you should consider before you embark on such arrangements.