ByLawyers News and Updates

Land tax – NSW

by

From 1 February there are changes to land tax exemptions in New South Wales. A new minimum ownership requirement applies to applicants seeking the principal place of residence land tax exemption.

A principal place of residence is generally exempt from land tax. Only one property can be claimed as a principal place of residence, for either an individual or a family. If a principal place of residence is used for non-residential purposes, then there will be a reduction of land tax for the proportion used as a residence.

A principal place of residence exemption can only be claimed by natural persons, not corporations or trusts except for a concessional trust: s 3B of the Land Tax Management Act 1956.

Following the amendments, s 15 of Schedule 1A of the Act now imposes a minimum ownership requirement in order for a property owner, or owners, to access the principal place of residence exemption. There is now no entitlement to the exemption unless all of the people who use and occupy the land as a principal place of residence together hold at least a 25% interest in the land.

Those who currently claim the principal place of residence exemption, but collectively have an interest in the land of less than 25%, can continue to claim the exemption as a transitional measure up to 31 December 2025.

The requirement does not apply to participants in an approved shared equity scheme under s 281 of the Duties Act 1997.

The By Lawyers Conveyancing (NSW) publication has been updated accordingly.

First home buyers – NSW

by

New caps and rules over first home buyers schemes in New South Wales come into force on 1 July 2023.

The newly elected New South Wales government has announced extensions to the First Home Buyer Assistance (FHBA) scheme. First home buyers purchasing a new or existing property valued at less than $800,000 will pay no transfer duty. The cap increases on 1 July 2023 from $650,000. First home buyers who buy a new or existing property valued between $800,000 and $1,000,000 can apply for a concessional transfer duty rate. The qualifying range increases on 1 July 2023 from the previous band of between $650,000 and $800,000.

Purchasers who exchange on or after 1 July 2023 will receive the benefit of these higher caps.

The Minns state government has honoured its pre-election commitment to reverse the annual property tax opt-in for first home buyers. The First Home Buyer Choice scheme does not apply to contracts exchanged after 30 June 2023. Full transfer duty is payable on all contacts exchanged on or after 1 July 2023. Purchasers who exchanged between 16 January 2023 and 30 June 2023 have until settlement to make an election between an annual property tax and full transfer duty.

The residence requirement has been extended – eligible first home buyers must now occupy their home for a continuous period of 12 months instead of six months, within 12 months of settlement. The residence requirement applies to the First Home Buyers Assistance scheme, the First Home Owner grant, and the deferral of transfer duty payment for off the plan transactions.

The  By Lawyers New South Wales conveyancing publications have been updated accordingly. The Purchase of Real Property (NSW) and 1001 Conveyancing Answers (NSW) guides contain detailed coverage of transfer duty concessions and government grants for the purchase of real property.

Duty concessions – VIC

by

The Victorian state budget contains provisions commencing on 1 July 2023 that affect transfer duty concessions and exemptions for special disability trusts and pensioners.

From 1 July 2023, pensioners purchasing real property for up to $600,000 are exempted from duty. These purchasers buying property valued between $600,001 and $750,000 pay a concessional rate of land transfer duty. The exemption and concession caps mirror the thresholds for first home buyers. Eligibility is assessed on the total value of the purchase.

From 1 July 2023, the special disability trust transfer duty deduction threshold will be increased from $500,000 to $1,500,000 for transfers of a principal place of residence. A new land transfer duty exemption will apply for the transfer of a home by an immediate family member to an individual eligible to be a beneficiary of a special disability trust. The property can be valued at up to $1,500,000. This new exemption is designed to complement the duty concessions and exemptions in s 38A of the Duties Act 2000. The exemption is intended to assist families who wish to provide a home for a severely disabled family member, but consider the process of creating and managing a special disability trust to be too expensive and complex.

The relevant By Lawyers Victorian conveyancing publications have been updated accordingly. The commentary in the Purchase of Real Property (VIC), Sale of Real Property (VIC), and 1001 Conveyancing Answers (VIC) guides contain extensive coverage of land transfer duty and land transfer duty exemptions.

Connect with us