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Save $’000s in Transfer Duty – Claim the Home Concession or First Home Concession

What is transfer duty?

Transfer duty, formerly known as stamp duty, is a state government tax payable on most transactions related to property. It is calculated based on the purchase price of the property or the value of the property; whichever is higher.

For residential property, transfer duty is payable in the following circumstances:

  1. Purchasing a home or an investment property;
  2. Transferring a share of your property to another person, family or friend; and
  3. Creating a trust over land that you previously owned for children or other family members.

Transfer duty varies also depending on whether or not a concession or exemption is available to the purchaser or transferee.

When can I claim a transfer duty concession?

You can claim a transfer duty concession if you are purchasing:

  • your first home;
  • vacant land on which you will build your first home; or
  • a house which you will use as your principal place of residence.

What are the differences, and how much money will I save?

First Home Concession

The first home concession is available for all you first home owners who have never owned property anywhere in the world. Ever. As such, it can only be claimed once in your life.

This concession saves you a substantial amount of money. For example, your duty on a $499,000.00 property will be NIL (compared to the investment rate transfer duty amount of $15,890.00).

First Home Vacant Land Concession

This concession is available for first home buyers who purchase land as their first property with intentions to build their first home. As with the first home concession, it can only ever be claimed once.

For example, if you are purchasing a block of land worth $350,000.00 as your first property to build your first ever home on, the concession transfer duty amount will be $8,250.00, whereas with no concession, you are looking at paying $10,675. Again, this is substantial amount of money that you will save.

Second and subsequent Home: Home Concession for Principal Place of Residence

This concession is available for home buyers who have held an interest in a home before but who are purchasing another home to be their principal place of residence. This concession can be claimed multiple times.

People do not realise that even though they are not eligible for a first home concession, they are still eligible for this home concession, which will save you thousands of dollars in the long run each time you purchase a new principal place of residence. For example, a property worth $800,000.00 incurs stamp duty of $29,025.00, however by claiming the home concession, your stamp duty will be $21,850.00.

This concession also applies to those first home buyers who purchase a property over the threshold of $550,000.00.

Interestingly, there is no concession available if you purchase vacant land and it is not your first property purchase (even if you intend to build your home on the land).

What are the eligibility requirements?

There is a strictly enforced list of eligibility requirements. The state government monitors compliance via computer data matching. If you get the concession and are later found to have not complied with any of the eligibility criteria, you can expect a bill from the government for the amount of the concession, plus penalties and interest.

First Home

  1. You must be at least 18 years of age;
  2. The property must be your first property in the world that you will hold interest in;
  3. The property value or consideration must be under the threshold of $550,000.00;
  4. You must occupy the property within one year after the transfer date;
  5. You must live in the property for at least one (1) year;
  6. You cannot rent the property out before you move in (however there is an exception if the property is already tenanted at the time a Contract is entered into and the tenancy must not be longer than 6 (six) months); and
  7. You cannot rent out any room for the first year after you move in.

First Home Vacant Land

  1. You must be at least 18 years of age;
  2. The property must be your first property in the world that you will hold interest in;
  3. You must have intentions to build your first home on the property;
  4. You must build and occupy the property within (2) two years after the transfer or settlement date;
  5. The property value or consideration must be under the threshold of $400,000.00;
  6. You must live in the property for at least one (1) year;
  7. You cannot rent the property out before you move in; and
  8. You cannot rent out any room for the first year after you move in.

For both the First Home concession and First Home Vacant Land concession, a purchase will still be classed as your first purchase even if you owned land prior to that as trustee for a trust or as trustee for another person.

Second or subsequent Home

  1. You must be at least 18 years of age;
  2. The property must be your principal place of residence;
  3. The property cannot be vacant land;
  4. You must live in the property for at least one (1) year;
  5. You cannot rent the property out before you move in (however there is an exception if the property is already tenanted at the time a Contract is entered into and the tenancy must not be longer than (6) six months); and
  6. You cannot rent out any room for the first year after you move in.

We can assist you in claiming these concessions, provide you with advice and we also provide in-house transfer duty lodgement. We have handled thousands of duty assessments over the years, and can let you know where you stand.

If you have any questions regarding your eligibility requirements or how to claim your concession, please contact Sajen Legal.