Company Title – The ins and outs
If you’re buying an apartment, villa or townhouse, it’s likely that it will be governed by strata title or company title.
But what exactly do those terms mean and how are they different?
Jump to section:
- What is Company Title?
- How do Company Title and Strata Title differ?
- Do I pay Stamp Duty?
- Does Land Tax apply?
- Will Capital Gains Tax apply on the sale of the shares?
- Is it difficult to borrow in respect to Company Title?
- Does the Conveyancing process differ?
The difference between Company Title and the more common forms of title, such as Torrens Title and Strata Title, is that when purchasing a Company Title property you are purchasing shares in a corporate entity (or “Company”). The owner of a Company Title property has a right to occupy a specific area in the company’s building (e.g., apartment no. 30) by virtue of owning an allocated number of shares in the building.
There are many similarities between Company Title and Strata Title ownership. The main difference being that if you purchase a Company Title property you own “shares” in the Company entitling you to exclusive rights in the home unit/townhouse, as evidenced by the issue of Share Certificates, rather than the more traditional ownership where you become the registered proprietor of the property, as evidenced by a Certificate of Title.
Standard ad valorem rates apply on the stamping of Company Title shares, stamp duty being paid as if the unit is held under Strata Title. The First Home Owners Grants and stamp duty concessions apply to Company Title, as they do to other more conventional titles.
Company Title units are viewed as being strata lots and although normally a Company would be not be liable to pay land tax, a Company Title property is treated differently. You will need to lodge a Land Tax return for the property and Land Tax will be assessed in the same way as if you owned the property under Strata Title.
Not if the property is your principal place of residence. Under the Income Tax Assessment Act a family home, including a Company Title family home, is exempt from Capital Gain Tax.
Each lending institution will have different lending criteria, but most banks and other lending institutions will provide finance in respect to Company Title purchases. A pre-approval is highly recommended before entering into a Contract.
A Company Title purchase is complex and involves many matters which are outside the normal scope of other conveyances. You should ensure that you have specialised legal representation.