Civic Heart buyers hit with stamp duty

Finbar Group’s $440 million South Perth apartment tower reached a milestone this week, reaching its top storey, but some buyers are being slugged with stamp duty ahead of settlement.

The development, which is Finbar’s largest and South Perth’s tallest building, was impacted by delays due to changes in planning policies and COVID-19 concerns.

Finbar launched the project in 2017, after amending its plans from development application approved in 2015.

But those who bought into the project more than three years ago are being asked to pay stamp duty in the tens of thousands of dollars.

The tax, also known as transfer duty, is normally paid upon settlement of a residential property.

For off-the-plan apartment purchases, the state government requires the fee three years on from a buyer entering a contract.

Many projects in Western Australia have faced delays in recent years, which has caused some developments to take longer than this to complete.

Finbar Group managing director Darren Pateman said the issue was a matter for the state government.

“Stamp duty on property purchases in Western Australia for off-the-plan sales are paid on the earlier of the date of settlement or three years after the date of the transaction,” he said.

“Given some contracts were entered into commencing mid-2020, some early contracts would now be triggering this payment date with the State Revenue Department.”

A Department of Finance spokesperson said while the department could not comment on individual matters, the Duties Act 2008 stipulated that transfer duty for off-the-plan apartments was due three years from contracts being signed.

“The Duties Act 2008 provides for an extended period of three years for payment of duty on contracts that are subject to issue of title, such as off-the-plan apartment purchases,” the spokesperson said.

“A buyer whose contract has not settled by the time duty is payable has the option of paying the duty when it is due or entering into a payment arrangement with RevenueWA.

“Payment arrangements are subject to interest at the prescribed rate of 11.7 per cent per annum.”

The department added that this interest rate may be reduced if the buyer establishes there are good reasons for doing so.

Business News understands there is at least one other apartment project in Perth where buyers are being asked to pay stamp duty ahead of moving in.

Australian Apartment Advocacy has called on the state government to put stamp duty payments on hold until settlement.

“There are a lot of projects under construction that won’t get built in that three-year timeframe because there isn’t the depth of builders,” AAA founder Samantha Reece said.

“These people are already in pain and this stamp duty is making it worse. This is the final straw for some people.”

Finbar Group has sold 253 of its 309 apartments, with sales volumes at $265.4 million.

The project commenced construction in 2021, with completion expected by June next year.