Broadly, there are five different classes of stamp duty exemptions or concessions that are available in the State of New South Wales.
- Transfers pursuant to a Will ($50) – section 63, Duties Act 1997 (NSW)
A concessional duty of $50 applies to transfers made from a legal representative to a beneficiary under a will. To be eligible for this concession, the transfer must accord to the terms of the will or to the rules of intestacy. Transfers that are the subject of a trust for sale contained in the will or that are appropriations of the property of the deceased person towards satisfaction of the beneficiary’s entitlement under the trust contained in the will are also eligible for the concession.
Where the beneficiaries agree to vary trusts contained in the will, stamp duty is calculated on the dutiable value of a proportion of their individual entitlements under the will. For example, beneficiaries A and B are both entitled to the residue of a deceased’s estate and decide that one property be transferred to A and another to B. In this case, A will only pay stamp duty on the half of the value of the one property that was agreed to be transferred to A. A will not pay stamp duty on the other half of the property that belongs to B under the will.
- Transfers pursuant to divorce and breakdown of de facto relationships (exempt) – section 68, Duties Act 1997 (NSW)
No duty is chargeable on a transfer of matrimonial/relationship property to a party in a relationship that has broken down. The exemption is applicable to various relationships (marriage, de facto, domestic) that are dissolved, annulled or terminated or in the opinion of the chief Commissioner broken down irretrievably. In such situations transfers to any one or more children or a trustee for the children are also exempt.
To be eligible for a concession after a marriage or a de facto relationship broke down, the transfer must be affected by a financial agreement made under the Family Law Act 1975 or a court order. For domestic relationships, the transfer must be affected by a court order made under Property (Relationships) Act 1984.
Property generally means property in relation to parties to any type of relationship. In a marriage and a de facto relationship property can also be given such meaning by a court order, which is not the case for purely domestic relationships.
- Transfer PPR to joint names, married couple or de facto partners (exempt or partially exempt) – section 104A-C, Duties Act 1997 (NSW)
A transfer of a family home or vacant land that is intended to be used as a family home between a married couple or de facto partners is exempt from stamp duty. It is important to remember that this exemption does not apply to a transfer between parties to a domestic relationship or to transfers of holiday houses.
A person can only have one family home which is his or her principal place of residence and which is the main residence in which the person ordinarily resides.
Further, the home must be used for a purely residential purpose. This means for example that you cannot conduct your business from family home. By way of general guidance, using one room in a house to occasionally work from home instead of the office is still exempt for stamp duty. However, if more than one room is used and/or if conducting work from home is more frequent, stamp duty may still be assessed at a reduced rate. In such case the uses a family home is put to will be apportioned by a valuer-general.
Both parties to a transfer must be in a relationship to claim the exemption. This means that a person cannot transfer their house to both a sibling and a partner at the same time if they seek to claim this exemption. This also means that a person who owns only a portion of a property can transfer that portion to their partner without the duty charged.
- Transfer to a self-managed super fund ($500) – section 62A, Duties Act 1997 (NSW)
A concessional duty of $500 applies to transfers from a member of a self-managed superannuation fund to a trustee of the self-managed superannuation fund.
To be eligible for this concession, there must be no other members of the self-managed superannuation fund apart from the transferees, the property must be used solely to provide a retirement benefit to the members and, if there is more than one member, the benefits received must be proportionate to what the members held before the transfer.
- Home buyer exemptions and concessions
From 1 July 2017, NSW Government introduced two measures to assist first home buyers: First Home Buyers Assistance Scheme and First Home Owner Grant (New Home).
To be eligible for the First Home Owner Assistance Scheme all purchasers must be natural persons who are at least 18 years old, who have not or whose spouse has not owned residential property in Australia or previously received an exemption or concession under First Home – New Home (a previous assistance scheme). At least one eligible purchaser must occupy the home as a principal place of residence for a continuous period of 6 months commencing within 12 months of completion of the agreement.
Under this scheme, purchasers are exempt from stamp duty on new and existing homes valued up to $650,000 and receive concessions for new and existing homes valued between $650,000 and $800,000.
No duty is payable on vacant land up to $350,000 and on vacant land valued between $350,000 and $450,000 there are concessions.
To be eligible for the First Home Owner Grant, a purchaser who is a natural person over 18 and who or whose spouse never had an interest in residential property must be buying a new home that is less than $750,000. Similarly, to the above scheme, a purchaser must never have received a first home owner grant in any state or territory before and must live in the home for 6 months continuously. At least one of the purchasers must be a permanent resident or Australian citizen.
To apply, you are required to hand over a signed application with all the supporting documentation to either your solicitor, in case of a stamp duty concession under the First Home Owners Assistance Scheme, or to lodge to the Office of State Revenue directly in case of first home owners grant.
***The content of this article does not constitute legal advice. It is intended only to provide a general overview of a topic. Before relying or acting on the content for this article, you should seek legal or other professional advice.