Australia: NSW Home Builders Bonus - New Stamp Duty Concessions
Property Update

NSW Home Builders Bonus

On 8 June 2010, the NSW Government introduced a Bill that, if passed, will introduce stamp duty concessions on the purchase of new houses. The concessions will begin on 1 July 2010 and will end on 1 July 2012.

A sale agreement will not be eligible if it is made before 1 July 2010 or it replaces an agreement that was made before that date.

The scheme applies to three types of purchase:

1. purchases of completed new homes that are ready for immediate occupation
2. off the plan purchases; and
3. vacant land purchase that is intended to be used as the site of a new home (and which is not an off the plan purchase).

For the purposes of the concession, a new home is a home that has not been previously sold or occupied as a residence and may include a home that has been substantially renovated.

To be eligible for the concessions, the new home must be intended to be used exclusively for residential purposes (or purposes ancillary to its use as a residence or as a residence on a farming property). In addition, the value of the property must not exceed:

• $600,000 for a new home or an off the plan purchase; or
• $400,000 in the case of vacant land.

Finally, there are time limits on when the construction works must be carried out in relation to vacant land and off the plan purchases. Off the plan purchases are only eligible for the concessions if completed:

• if the purchase contract is entered into between 1 July 2010 and 30 June 2011 – by 31 December 2012; and
• otherwise – by 31 December 2013.

For vacant land purchases, the foundations must be laid within 26 weeks and the works must be completed within 18 months after the laying of the foundations for the home begins (or such longer period as the OSR allows).

There are three types of concession under the scheme, namely:

1. a pre-construction duty exemption;
2. a senior's principal place of residence duty exemption; and
3. a post-construction duty reduction.

1. Pre-construction duty exemption

No duty is payable on a purchase agreement (or transfer) if the pre-construction duty exemption applies. The exemption applies to off the plan purchases or vacant land purchases if:

• the eligibility criteria set out above is satisfied; and
• construction of the new home has not commenced when the purchase agreement is entered into or when the transfer occurs.

2. Senior's principal place of residence duty exemption

No duty is chargeable on a purchase agreement (or transfer) if the senior's principal place of residence duty exemption applies. This exemption applies to a new home purchase or an off the plan purchase if the purchase is made in connection with a residence relocation by an eligible senior.

A person is an eligible senior if the person is at lest 65 years old, is an Australian citizen or permanent resident and neither the person, nor his or her spouse (if any), has previously had the benefit of the senior's principal place of residence duty exemption. If there is more than one purchaser then each of them must be an eligible senior. No other purchasers are permitted.

The eligible seniors must sell, or have sold, their previous home and occupy the new home as their principal place of residence. The previous home must be sold either:

• within 12 months before the eligible purchase agreement; or
• within 6 months after completion of the eligible purchase agreement.

The previous home must have been affixed to land in New South Wales and the new home must be occupied as the purchaser's principal place of residence for a continuous period of at least 12 months, with that occupation starting within 12 months after completion of the eligible purchase agreement.

3. Post- construction duty reduction

The post-construction duty reduction results in a 25% reduction in duty. The reduction applies to any other agreement or transfer approved under the scheme that is not eligible for the pre-construction duty exemption or the senior's principal place of residence duty exemption.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.