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Friday, 24 October 2014
 
   
   
   
 
 Stamp duty & tax concessions for real estate
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 Stamp duty & tax concessions for real estate
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There are a number of exemptions and concessions for payment of stamp duty upon transfer of land under the Duties Act 2000 (Vic). This summarises the most important beneficial exemptions and concessions.
Deceased Estates (Section 42)
The transfer of property by the legal personal representative of a deceased person is free from stamp duty if the transfer is in accordance with the will or in accordance with intestacy provisions. There is no duty payable on a transfer of property of a deceased to an executor under section 13 Administration & Probate Act 1958 (Vic).
Spousal Transfers (Section 43)
No duty is payable on the transfer of dutiable property between married or domestic partners.
Breakdown of Marriage or Domestic Relationship (Section 44)
Upon the breakdown of a marriage or a domestic relationship, a transfer of dutiable property can occur without stamp duty where:
1          The transfer has occurred solely due to the breakdown of the marriage or relationship;
2          The property is transferred by:
a)         One or both parties to the marriage or relationship;
b)        The trustee of a trust to which one or both parties to the marriage or relationship are beneficiaries;
c)         A corporation;
3          There is a transfer of property to:
a)         One or both parties to the marriage or relationship;
b)        The dependent child of one or both parties to the marriage or relationship;
c)         A combination of the first two people;
d)        The trustee of a trust of which no other person is a beneficiary except one or both parties to the marriage or relationship, or a dependent child of one or both parties to the marriage or relationship
Where the transferor is a corporation, the value of the transferred property must not exceed the value of the interest of the parties to the marriage or relationship in the corporation. Because of the transfer, the value of the interest in the corporation of the parties to the marriage or relationship must reduce in proportion to the value of the transferred property.
There is no duty payable where a corporation due to the breakdown of the marriage has made a declaration of trust or relationship where the beneficiaries are one or both parties to the relationship, a dependent child of one or both parties to the relationship or a combination of these people. Again, the value of the property transferred must not exceed the value of the interest both parties to the relationship have in the corporation, and the interest of the parties in the corporation must reduce proportionately to the value of the dutiable property transferred.
First Home Owner Exemption or Concession (sections 61 to 63B)
An exemption or concession from stamp duty will be available on the transfer of land purchased on or after 1 January 2006 where the purchaser is an eligible homeowner. To qualify as an eligible homeowner, the purchaser must:
1          Be a bona fide purchaser for adequate consideration;
2          Intend to reside in a dwelling on the land as your principal place of residence;
3          Have a dependent child;
4          Have not owned a home anywhere in Australia, which was used as your principal place of residence:
a)         At the date of contract of sale or within 11 months of that date (where there is an existing dwelling on the property)
b)        At the date of building contract or the date on which building commenced (whichever is earlier), or within 11 months of that date (where there was no dwelling on the land when entering the contract of sale).
If the person is buying the land with their partner, the exemption or concession is only available where both parties fulfil the eligibility criteria.
The amount of the exemption or concession is in accordance with the Value, which is determined as follows:
a)         Where there is an existing dwelling – the purchase price or market value of the land and dwelling (whichever is greater)
b)        Where there is no dwelling on the land at the time of contract but a dwelling is constructed before transfer or within 3 years of the transfer – total of the purchase price or market value of the land (whichever is greater) and the cost of construction of the dwelling. The concession or exemption is only granted upon the completion of construction. If the dwelling is completed within 3 years of the transfer and duty has already been paid, the purchaser will be entitled to a refund of the duty paid.
A full exemption from stamp duty will be available where the Value is less than $150,000.00. Where the Value is between $150,000.00 and $200,000.00, a pro rata concession is available. However, where the Value is greater than $200,000.00 there is no concession or exemption available.
If a purchaser is entitled to the First Home Owner’s exemption or concession as well as the First Home Bonus, the purchaser must elect in writing to receive either the exemption or the concession, but cannot receive both.
Pensioner Exemption or Concession (Sections 58 to s60A)
An exemption or concession from stamp duty is available to eligible concession cardholders who have purchased land and a dwelling. Requirements for eligibility are:
1          The purchaser holds one of these concession cards at the date of transfer:
a)         Pensioner Concession Card (Centrelink);
b)        Health Care Card (Centrelink);
c)         Pensioner Concession Card (Department of Veterans’ Affairs);
d)        Gold Card (Department of Veterans’ Affairs);
2          The purchaser is a bona fide purchaser of land for adequate consideration;
3          The purchaser intends to reside in a dwelling on the land as the principal place of residence. The dwelling may be an existing dwelling, a dwelling built under a house and land package, or a dwelling that is built on vacant land that the purchaser has bought;
The pensioner exemption or concession may only be claimed once. If the purchaser has already claimed the similar concession provided for by Stamps Act 1958, they cannot claim the pensioner concession under the Duties Act 2000. The amount of the concession or exemption is calculated in accordance with the Value, which is determined as follows:
a)         Where there is an existing dwelling at the time of transfer – the purchase price or market value of the land and dwelling (whichever is greater)
b)        Where there is no dwelling on the land at the time of transfer but a dwelling is constructed on the land within 3 years of the transfer – the total of the purchaser price or market value of the land (whichever is greater) and the construction costs of the dwelling. The concession or exemption will only be available upon completion of the dwelling. If the dwelling is completed within 3 years of the transfer and the duty has already been paid, the purchaser will be entitled to a refund of the duty paid.
c)         For contracts entered after 30 May 2006, a full exemption from stamp duty is available where the Value is less than $300,000.00.
d)        Where the Value is between $300,000.00 and $400,000.00 a concession will be available. However if the Value is greater than $400,000.00, there will be no entitlement to either an exemption or concession for stamp duty payable.
Where a person qualifies for both the Pensioner exemption or concession and the First Home Owners Bonus, the person must elect in writing whether to receive the exemption or the Bonus, but cannot receive both.
Bankruptcies & Administrations (Section 48)
There is no duty payable:
1          Upon the transfer of dutiable property due to the appointment of a receiver or trustee in bankruptcy or the appointment of a liquidator;
2          Upon the vesting of property in a liquidator pursuant to an order made under section 474(2) Corporations Act 2001;
3          Upon the transfer of dutiable property for no consideration to a former bankrupt from the estate of a former bankrupt;
4          Upon the transfer for consideration of dutiable property previously held by a bankrupt from a trustee in bankruptcy to the spouse or domestic partner of the bankrupt. After the transfer, the property must be the principal place of residence of the bankrupt’s spouse or domestic partner;
5          Upon the vesting of property pursuant to a vesting order made under section 51 Trustee Act 1958
Charities and Friendly Societies (Section 45)
No stamp duty is payable on a transfer of dutiable property to, or a declaration of trust over dutiable property held on trust for:
a)         A religious, charitable or educational purpose;
b)        A corporation or body of people established for a religious, charitable or educational purpose; or
c)         A friendly society
Health Centres and Services (Section 45A)
No stamp duty is payable on a transfer of dutiable property to, or a declaration of trust over dutiable property held on trust for:
a)         An ambulance service;
b)        A community health centre;
c)         A denominational hospital;
d)        A multi-purpose service (see Section 115V (2) and Part 4A Health Services Act 1988);
e)         A public health service;
f)         A public hospital; or
g)         The Victorian Institute of Forensic Mental Health (see section 117B Mental Health Act 1986)
Joint Tenants and Tenants in Common (Section 54)
There is no duty payable where there is a transfer of land by joint tenants to themselves as tenants in common in equal shares, or where there is a transfer of land by tenants in common in equal shares to themselves as joint tenants.
Other Exemptions
Other general exemptions for a transfer of dutiable property are in Part 5, Division 3 Duties Act 2000, and include:
a)         Transfers to cooperatives (Section 46)
b)        Government bodies and diplomats (Section 47)
c)         Amalgamation of industrial organisations (section 48A) and
d)        The conversion of a land use entitlement to a different form of title (section 50A).
Other exemptions relating specifically to land are in Part 5, Division 4 of the Duties Act 2000, and include:
a)         Transfers for Crown grants and public rights of way (Section 51)
b)        Government bodies (Section 52)
c)         Defence service homes (Section 53)
d)        Equity release programs (Section 55)
e)         Transfers of farms to relatives or charities (Section 56)
f)         Transactions involving financial institutions & natural persons (Section 57A –F)
Need More Information
Behan Legal advises and assists on these important issues. For an appointment, call 9646 0344.
 


  
 

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