Australia: What are the residential stamp duty concessions in NSW?

Commercial directions
Last Updated: 9 February 2011
Article by Marissa Dimarco

Any person who is looking to purchase residential property in New South Wales should first be aware of the current concessions in duty available to them as well as other benefits.

 Whilst we are all aware of the first home purchaser benefits that have been in existence (referred to as the First Home Plus Scheme and First Home Owner Grant), as of 1 July 2010, the Government introduced the NSW Home Builders Bonus Package which provides for duty exemptions and concessions for certain new home purchases, off the plan purchases, and vacant land purchases on which a home will be built within a specified time.

This package also provides for a specific exemption for eligible seniors purchasing a new home as their principal place of residence. These concessions and benefits are discussed in more detail below.

 First Home Owner Grant / First Home Plus Scheme

 The First Home Owner's Grant of $7,000 is available to person's buying or building their first home and who meet the following criteria:

  • Each applicant is a natural person and not a company or trust
  • At least one applicant is a permanent resident or Australian citizen
  • Each applicant must be 18 years of age
  • All applicants and / or their spouse / de facto have not previously owned a residential property jointly, separately or with some other person in any State or Territory of Australia, and have not occupied that property for a continuous period of at least six months
  • The total value of the property does not exceed the capped amount of $750,000 for eligible transactions. This rule came into effect on 1 January 2010
  • This is the first time an applicant and / or their spouse / de facto will receive a grant in any State or Territory of Australia
  • At least one applicant will occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of settlement or construction of the home. The residency requirement is not applicable for permanent members of the Australian Defence Force.

 The First Home Plus Scheme provides eligible purchasers with a complete exemption on transfer duty on homes valued up to $500,000 and concessions on duty for homes valued between $500,00 and $600,000. There is no concession available on homes valued over $600,000.

Concessions are also available for vacant land with no duty payable on land valued up to $300,000 and partial concessions available for vacant land between $300,000 and $450,000. There is no concession on land valued at over $450,000.

The concession in duty when purchasing a home or vacant land can be effected immediately upon exchange of contracts via the completion of a statutory declaration confirming that either the residency requirements will be met or that the intention is to construct a residential dwelling on the vacant land that will be your home. With regards to the First Home Owners Grant, when purchasing a home, the funds can be, and usually are made available at settlement. This however differs to purchasing vacant land whereby the First Home Owners Grant funds are not paid until the first progress payment is payable to the builder.

 To qualify for the First Home Plus Scheme you must satisfy the following criteria:

  • The contract and the transfer must be for the purchase of the whole property
  • All purchasers must be eligible purchasers, meaning they are a natural person of at least 18 years of age who have not, and whose spouse / de facto have not previously received an exemption or concession under First Home Plus and has not at any time owned residential property in Australia other than property owned solely as trustee or executor. An eligible purchaser can still purchase property with other parties who are not eligible and obtain a concession. To qualify, they must purchase at least 50% of the property
  • Similar to the First Home Owner Grant, at least one applicant will occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of settlement or construction of the home. The residency requirement is not applicable for permanent members of the Australian Defence Force. Any person who receives benefits under the First Home Owners Grant or First Home Plus Scheme who then fails to satisfy the residency requirements should immediately contact the Office of State Revenue for payment of duty and repayment of the First Home Owner Grant. Failure to do so will not only require the repayment of the grant and any concession on duty, but a fine will also be imposed.

 NSW Home Builders Bonus

 Introduced on 1 July 2010, the NSW Home Builders Bonus scheme provides exemptions and concessions for certain purchases of new homes, homes off the plan and vacant land on which a new home will be built. This scheme also provides a specific exemption for eligible seniors (65 and older) purchasing a new home as their principal place of residence.

 To be eligible for the NSW Home Builders Bonus the value of vacant land must not exceed $400,000 and new homes must not exceed $600,000. The concession regarding new residential houses provides a full exemption on transactions relating to vacant land and off the plan purchases where building has not commenced. A partial concession of 25% of duty payable applies to completed new homes or off the plan purchases where construction has commenced.

 Unlike the First Home Owner Grant and First Home Plus Scheme, there is no limit to the number of exemptions a person may receive under this scheme. To be eligible for a concession the following criteria must be satisfied:

  •  Agreements for sale or transfers must be entered into on or after 1 July 2010
  • A new home is a home that has not previously been occupied or sold as a place of residence, and includes a substantially renovated home
  • For vacant land, construction must commence with the laying of foundations within 26 weeks after completion of the agreement for sale or transfer
  • Applications for exemption must be made within three months of the date of the agreement for sale or transfer
  • The agreement for sale or transfer must be for the whole of the land
  • The new home constructed is to be only used as residential premises and must not be used for any other purposes such as commercial, industrial or professional purposes
  • The agreement for sale or transfer made on or after the 1 July 2010 must not replace an agreement for sale or transfer that was for substantially the same property, entered into and then terminated prior to 1 July 2010.

 Whilst seniors can take advantage of the concessions available to all persons, they also receive a full exemption where the agreement for sale or transfer is either a completed new home purchase or an off the plan purchase where construction has commenced. This of course differs to those not classed as seniors who only receive a 25 percent exemption. The requirements to be eligible for the seniors full exemption are as follows:

  • All of the purchasers must be aged 65 or over, or where a married couple or de facto partners are the purchasers, as long as one of them is aged 65 or older
  • The eligible senior must move into the home within 12 months of completion and occupy the property as their principal place of residence for a continuous period of at least 12 months
  • The eligible senior must have owned and occupied a home in NSW within the last 12 months before the date of the current agreement for sale
  • The eligible senior (and spouse if owner) must dispose of such former home in the period either prior to, or within 6 months after the completion of the current agreement for sale.

 The NSW Home Builders Bonus is to be in place until 1 July 2012.

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.

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Authors
Marissa Dimarco
 
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