Getting the most out of stamp duty exemptions in your state
Buying a property is one of the biggest purchases that you will ever make, so understanding and preparing for outgoings, and what exemptions you might be entitled to could make a huge difference to your financial position.
Stamp duty, or transfer duty, is a general tax imposed by the state government on the purchase or transfer of almost any real estate.
In fact, stamp duty plays a key role in the revenue raised for state governments. Last month, the NSW State Treasurer reported $345 million less revenue in the Budget Statement 2019-20 due to weaker residential property prices and lower than expected residential transaction volumes.
Understanding the exemptions and concessions available to you can significantly reduce the costs associated with buying or transferring property, especially between family members, for pensioners, farmers and even first home buyers.
Stamp duty is just one of the few settlement costs that purchasers need to allow room for in their budget. Others include conveyancing fees, valuation and mortgage registration.
Stamp duty exemptions and concessions for your state
Stamp duty is decided by each state or territory government, not the federal government, so rates and exceptions vary state-by-state.
Australian Capital Territory (ACT)
Help for those with a disability
Under the disability duty concession scheme, ACT residents who qualify for the NDIS can access a stamp duty concession when purchasing a home with a dutiable value of $750,000 or less, and that one of the buyers must move into the home within twelve months of purchasing, and live there continuously for at least twelve months.
First home buyers
From 1 July 2019, under the home buyer concession, there is no payable duty when purchasing your first home, provided that your gross income is under the threshold ($160,000 p.a. without children, and incrementally increasing with the addition of children) and that one of the buyers must move into the home within twelve months of purchasing, and live there continuously for at least twelve months.
For more information about stamp duty in the ACT, please see the ACT Revenue Office website.
New South Wales (NSW)
Deferring the stamp duty on off the plan purchases
When purchasing off the plan, buyers are able to defer the stamp duty for up to twelve months after signing the agreement, or until the property is completed or handed over, provided that it is intended as the main residence.
Transfers between families
Some transfers between family members may also qualify for an exemption or concession. If stamp duty has already been mistakenly paid when you were entitled to an exemption or concession, you are able to claim a refund for up to five years.
Also exempt from stamp duty is the transfer of the family home, or land intended to be used as the site of the family home, between married or de facto partners, where the transfer of the property will result in the property being held equally by both partners.
Other exemptions and concessions to know
In the event of the breakdown of a marriage, de facto partnership or relationship break-up, transfer duty may be exempt if the property is being transferred to; either, or both, of the partners in the relationship, a child or children (or trustee for the child or children) of either partner.
If someone inherits a property as a beneficiary of a will, they are only required to pay a concessional transfer duty of $50. However, if they gift part of the property, or have part of the property gifted to them from another beneficiary of the will, duty does need to be paid on that share of the property.
First home buyers
Under the First Home Buyer Assistance scheme, those looking to enter the market for the first time may be able to access an exemption or concessional rate on the transfer duty applicable to their purchase.
For new and existing homes valued less than $650,000, or $350,000 for vacant land, NSW residents may be able to apply for a full exemption. For those purchasing a home between $650,000 and $800,000, or vacant land between $350,000 and $450,000, may be eligible for a concessional rate.
Access conditions do apply. The scheme is available to individuals only (i.e. not a company or trust), who are Australian citizens or permanent residents, who have never owned (or co-owned) residential property in Australia. There are also living requirements; one of the first home buyers must move into the home within twelve months of purchase and live there continuously for at least six months.
For more information about other exemptions, please see the Revenue NSW website.
Northern Territory (NT)
Territory home owner discount
Under the territory home owner discount, a reduction of up to $18,601 is available for those who have not had a relevant interest in a property in the NT in the previous 24 months. The conditions around this are that the property was purchased on or after 8 February 2019, and one of the buyers must move into the home within twelve months of purchasing, and live there continuously for at least six months.
Help for concession card holders
Seniors, pensioners and carers over the age of 65 may be eligible for a reduction of up to $10,000 in stamp duty when buying a home or land to build a home. To be eligible for this concession the home must have a dutiable value of $750,000 or less, or $385,000 or less when purchasing land.
In the Northern Territory, exemptions exist for matrimonial homes, family farms, financial settlements for marriages and de facto relationships, and the distribution of wills, intestacy or company liquidation.
First home buyers
Unfortunately, the first home owner discount, recently stopped running in the NT; however, if you purchased an established home with a dutiable value of up to $650,000 on or before 6 May 2019, you can apply for up to $23,928.60 off your stamp duty.
For more information about stamp duty in the Northern Territory, please visit the NT Gov website.
The home concession can save those acquiring a home after their first home up to $7,175. This concession applies to the first $350,000 of the value, and the general transfer rate applies thereafter.
To be eligible, buyers must move into the home and live there on a daily basis within one year of settlement, do not dispose of the property (in whole or party) before moving in, or within one year of moving in.
First home buyers
In the sunshine state, those eligible for the first home concession could save up to $15,925. To be eligible for the concession, individuals must not have held interest in any residence in Australia (or overseas), paid market value if the property is between $500,001 and $549,999, not dispose of the property (in whole or part) before moving in, which should occur within one year of settlement.
Similarly, when acquiring vacant land for the purpose of building a first home, buyers could be eligible for a rebate that may result in paying no duty under the first home vacant land concession. The concession can save buyers up to $7,175 for purchases up to $399,999.
To claim the first home vacant land concession, buyers must be sure that there is no building on the land, be paying market value if the land is valued between $320,001 and $399,999, only build one home on the land, and be able to move in and live there on a daily basis within two years of settlement.
For more information about stamp duty concessions, please see the Queensland Government website.
South Australia (SA)
For information about stamp duty in South Australia, please see the Revenue SA website.
Help for pensioners
Currently, until 30 June 2020, pensioners who sell their home in Tasmania and downsize by purchasing another home in Tasmania, could be eligible for a 50 per cent concession on the transfer duty of their new home, provided it has a dutiable value of $400,000 or less and also have a dutiable value less than the former home. To access this concession, they must meet special requirements relating to eligibility of the individual (or individuals) and property sale.
Transfers for personal relationships
Transfers in personal relationships are exempt from duty if the property is the parties’ principal place of residence at the time of transfer. Other eligibility requirements include that the property must be held as joint tenants or tenants in common, and the parties to the transfer are the couple or caring partners and no other party is involved in the transfer.
First home buyers
Under the duty concession for first home buyers of established homes, a 50 per cent concession is available for properties with a dutiable value of up to $400,000. To be eligible for the concession, buyers must not have previously owned a home in Australia, or accessed the First Home Owner Grant in any state or territory of Australia and must ensure that the application is fully completed and lodged with all supporting documentation.
For more information about exemptions and concession in Tasmania, please see the State Revenue Office of Tasmania's' website.
Off the plan
Off the plan purchases may be eligible for the off-the-plan duty concession. When paying the transfer duty on off the plan purchases, the dutiable value of the property is calculated at the contract price minus construction or refurbishment costs incurred on or after the contract date.
In addition to being eligible for the principal place of residence concession or the first-home buyer duty exemption or concession, to access the off-the-plan duty concession the dutiable value of the home must be $750,000 or less for first home buyers, or $550,000 or less for home buyers. Additionally, at least one purchaser must use the property as their home for a continuous period of twelve months, starting within twelve months of possession of the property.
Help for pensioners
Eligible pensioners may be entitled to access a once-only exemption or concession to help them access the property market. Properties valued up to $330,000 are exempt from transfer duty, while properties valued between $330,001 and $750,000 may qualify for a concessional rate to their duty. In order to be eligible, pensioners must hold an approved concession card, buy the property at market value and intend to live in the home as their principal place of residence.
To ease the burden on those looking to purchase a farm or move into the farming industry, the young farmer duty exemption or concession is available to buyers under 35, purchasing their first farmland property, and carrying on (or intending to carry on) a business of primary production in relation to the purchased property. Farmland valued at $600,000 or less may qualify for an exemption, and a concession from duty is available for properties values between $600,001 and $750,000.
First home buyers
Since 1 July 2017, the first home buyer duty exemption or concession is applicable to contracts of sale.
If the value of the home is up to $600,000, qualifying first home buyers will be exempt from transfer duty. Properties valued between $600,001 and $750,000 are eligible for the first home buyer duty concession.
To be eligible for the exemption or concession, buyers must use the property as the principal place of residence for a continuous period of twelve months, commencing within twelve months of settlement, and at least one applicant must satisfy residency requirements.
Western Australia (WA)
Farms used solely for primary production can be transferred to a family member without stamp duty. However, there can be no exemption for any subsequent transaction of the same land within five years.
Transfers between spouses
Similarly, transfers between spouses or de facto partners are also exempt. To qualify for a spousal exemption, the parties must be married or in a de facto partnership for at least two years, use the property solely or dominantly for residential purposes and be the principal place of residence for the spouses or de facto partners at the time of transfer.
Additionally, the transferor must be the sole owner of the property and as a result of the transfer, the partners will be the only owners of the property and registered as joint tenants or tenants in common in equal shares.
First home buyers
In Western Australia, first home buyers are exempt from stamp duty on purchases up to $430,000 and concessions are available up to $530,000. There are also living requirements to keep in mind; one of the first home buyers must move into the home within twelve months of purchasing, and live there continuously for at least six months (or within twelve months of completion if building).
For information about other exemptions, please see the WA Department of Finance website.
If you’re thinking about buying, it’s a good idea to speak to a financial planner or Lending Specialist to give you the best indication of which concessions or exemptions you might be able to access.
The opinions expressed in this article are the opinions of the author(s) and not necessarily those of homeloans.com.au. The above is general commentary only and is not advice tailored to any individual’s financial situation. We recommend seeking advice from a mortgage or finance professional before implementing changes relating to your finances.