And you think you know a dodgy RE?

Hodge · 22nd Jul, 2014

Mine takes the cake!

Calls me today, vendor is keen to sell and needs cash asap. Told me to offer $600K, but contract will be written as $500K and pay vendor $100K cash. This way I save on stamp duty and i'm guessing he saves CGT.

WTF? I am sure ATO won't ask questions when $100k gets withdrawn from my account in cash.

I guess it's worth the jail time

neK · 22nd Jul, 2014

Hmm. Your ideas are intriguing to me and I wish to subscribe to your newsletter

So when will the payment of $100k occur?
At settlement?
(Cos there ain't no way im paying someone $100k in that manner!).

Hodge · 22nd Jul, 2014

Well my guess would be upon signing of contract cause he needs the cash. If I don't end up in jail that is!

datto · 22nd Jul, 2014

This is too easy. When you go to sign the contract for 500K, the agent says "arh, Mr Hodge can you, by any chance, LEND me 100K?"

You then say "sure, I just happen to have 100K here in my brief case. There you go, pay me back whenever"

There is no law against lending people money on a private basis.

neK · 22nd Jul, 2014

Hodge said:
Well my guess would be upon signing of contract cause he needs the cash. If I don't end up in jail that is!

Would you like to buy my house and do the same?
Then ill rescind the contract and keep the $100k.

Hodge · 22nd Jul, 2014

neK said:
Would you like to buy my house and do the same?
Then ill rescind the contract and keep the $100k.

No, but can happily recommend you a real estate agent that can help you!

Waldo · 22nd Jul, 2014

If its not in the contract, just come along to settlement & forget to bring the 100k cash? What are they going to do, back out of the contract and get their fraud dragged through court?

If it is in the contract its all above board. Either way you win?

joeExpat · 23rd Jul, 2014

This is completely normal in many parts of the world, perhaps the seller is from one of these areas. The banks even set aside a period of time at settlement where they and the notary "go for a coffee" and the cash is handed over. It is expected. I had to negotiate hard to minimize this when I bought in Spain and even ended up having to pay more because I wouldn't pay the black money.

Perp · 23rd Jul, 2014

datto said:
This is too easy. When you go to sign the contract for 500K, the agent says "arh, Mr Hodge can you, by any chance, LEND me 100K?"

You then say "sure, I just happen to have 100K here in my brief case. There you go, pay me back whenever"

There is no law against lending people money on a private basis.

Sure there is, if it's done with an intend to defraud. There is no reason for doing this other than to defraud the ATO, a spouse, a debtor, a business partner, and/or some other party.

Hodge · 23rd Jul, 2014

That's a good point perp. I think he's going through a divorce so the partner would think that the property sold for much less.

Big Will · 23rd Jul, 2014

Hodge said:
Mine takes the cake!

Calls me today, vendor is keen to sell and needs cash asap. Told me to offer $600K, but contract will be written as $500K and pay vendor $100K cash. This way I save on stamp duty and i'm guessing he saves CGT.

WTF? I am sure ATO won't ask questions when $100k gets withdrawn from my account in cash.

I guess it's worth the jail time

Not the REA but actually the vendor.

If it is a new build it would be the builder wanting to play less tax or it could be divorce as previously mentioned or even an investment property for GCT. If it was their PPOR there is no GCT so likely one of the above.

You would need the 100k cash in hand when signing the contract and you would revoke your cooling off and would have to be an unco offer... Otherwise good luck trying to get $100k from the vendor. If they were stupid enough to sign the contact 100k less and say you can wait till settlement to pay it (highly unlikely) then I would just say it isn't in the CoS...Profit

impala67 · 23rd Jul, 2014

Perp said:
...There is no reason for doing this other than to defraud the ATO, a spouse, a debtor, a business partner, and/or some other party.

Why would the REA go along with it? Wouldn't they advise against it?

Perp · 23rd Jul, 2014

impala67 said:
Why would the REA go along with it? Wouldn't they advise against it?

They should, but many seem to have the view that tax avoidance - in particular - is some kind of victimless crime, and treat it like a sport.

Big Will · 23rd Jul, 2014

impala67 said:
Why would the REA go along with it? Wouldn't they advise against it?

Yes they likely would advise against it but what if the vendor wants to get a cash deal done they will win.

Hodge · 23rd Jul, 2014

Actually it was the rea's idea. He said he told the vendor and vendor was happy with the arrangement.

I wonder who is more likely to get in trouble? Probably the vendor.

Chris B · 23rd Jul, 2014

Not a good idea for other reasons too...
1. If this is for an IP, then you end up taking on the CGT liability when you want to sell, as records will only show the $500k you paid.
2. Makes it very difficult to borrow against the full purchase price.

If the agent is stupid enough to put the suggestion in writing, you could report him to consumer affairs.

Hodge · 23rd Jul, 2014

That's some good points Chris. Don't think I'll waste my time reporting him. Doubt they would even follow it up.

And you think you know a dodgy RE?

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Hodge

neK

Hodge

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neK

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Waldo

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Perp

Hodge

Big Will

impala67

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Big Will

Hodge

Chris B

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