Transfer Duty Concessions and Exemptions in NSW

Transfer duty, also known as stamp duty, is a tax obligation in New South Wales (NSW) that applies to a wide range of property transactions. Fortunately, there are several concessions and exemptions available that can help reduce this financial burden for those who qualify. These benefits are particularly relevant to first home buyers, beneficiaries of deceased estates, and individuals involved in property transfers between family members. Understanding these key concessions and exemptions is essential for making informed decisions and potentially saving on stamp duty costs.

First Home Buyers

The First Home Buyers Assistance Scheme (FHBAS) in NSW offers relief to eligible first home buyers by providing full exemptions or reduced rates on transfer duty. This scheme is designed to support individuals entering the property market for the first time.

To be eligible for the FHBAS:

• The purchase must be of a new or existing home, or vacant land within NSW.

• The property value must fall within the designated thresholds. The property value thresholds as of 1 July 2023 are:

  • New and Existing Homes

    • Full exemption for homes value that are equal to or less than $800,000.

    • Concessional transfer duty rate for value that is above $800,000 and less than $1,000,000.

  • Vacant Land

    • Full exemption for vacant land valued that are equal to or less than $350,000.

    • Concessional transfer duty rate for value that is above $350,000 and less than $450,000.

• The transfer must involve the entire property.

• The applicant must be an individual (not a company or trust) and over the of age 18 years. Age and legal structure requirements may be waived upon application.

• Neither the applicant nor their spouse/partner must have previously owned or co-owned residential property in Australia.

• At least one applicant must be an Australian citizen or permanent resident.

• The purchaser must meet specific residence requirements for new or existing homes. For contracts exchanged on or after 1 July 2023, the purchaser must move into the home within 12 months of settlement and live there as their principal place of residence (PPR) for at least 12 continuous months. For contracts that are exchanged between 1 July 2017 and 30 June 2024 (inclusive), the purchaser or one of the other eligible first home buyers must move into the home within 12 months after settlement and live in the property as their PPR for at least 6 continuous months. Members of the permanent forces of the Australian Defence Force will not have to meet these residence requirements if they are on the NSW electoral roll.

After exchanging contracts, eligible first home buyers can apply for the FHBAS by submitting the FHBAS Application Form along with proof of identity documents through their solicitor or conveyancer.

Beneficiaries of Deceased Estate Transfers

Beneficiaries who receive property from a deceased estate may be eligible for a concessional rate of transfer duty in NSW. This concession aims to reduce the financial impact on those inheriting property under a will. You will pay transfer duty at a concessional rate of $50.00 if you receive property from a deceased estate in accordance with the terms of the will and a concessional rate of $100.00 for transmission applications or transfers entered on or after 1 February 2024.

To be eligible for a concessional rate, the property must be inherited in accordance with the terms of a valid will or under the rules of intestacy, which apply when a person dies without leaving a will. When a person dies 'intestate,' the surviving spouse typically receives the entire estate unless the deceased has children, in which case the estate may be divided according to the rules of intestacy. If the will is contested, the transfer duty is determined by a court order, which acts as an amendment to the will.

If beneficiaries choose to vary their entitlements under the will, the standard transfer duty rate applies to any portion of the property that deviates from the original terms of the will. Please note that if you vary the entitlements under a will, you must provide a valuation report as evidence of the value of the property to assess the duty. In cases where property is exchanged or sold between beneficiaries, the portion transferred outside the original will terms is subject to the normal duty rates.

Beneficiaries must submit an application for duty assessment through their solicitor or conveyancer, by providing the original transfer documents, proof of identity, and supporting documentation, such as probate and the will, or a letter of administration.

Family Transfers

Transfers of property between family members are generally subject to transfer duty, but specific exemptions and concessions are available, particularly for transfers between married couples, de facto partners, and relationship break-ups.

Married Couples and De Facto Partners

Transfer duty is not payable on residential land transfers between married couples or de facto partners if the property is the family home or vacant land intended for a family home. On that basis, the property must be held equally by both partners after the transfer. Furthermore, de facto couples must be living together for at least two years to qualify.

Family Home Used for Other Purposes

If the family home is also used for non-residential purposes, the exemption applies only to the residential portion. A single room used for business purposes may still qualify for the exemption if the business is primarily conducted elsewhere.

Relationship Break-ups

Transfer duty may be exempt in the case of a marriage, de facto, or domestic relationship break-up, provided the property is transferred to one or both partners, their children, or children of either partner, or a trustee for the child, or children of either partner. Foreign transferees who are eligible for this exemption are also exempt from surcharge purchaser duty.

To apply for these exemptions, individuals must submit the original signed transfer document or a copy of the transfer from PEXA, proof of identity, and completed Purchaser Declaration Form.

Key Takeaways

Navigating the complexities of transfer duty in NSW can be challenging, but understanding the available concessions and exemptions can provide significant financial relief. Whether you are a first home buyer, a beneficiary of a deceased estate, or transferring property between family members, it is essential to be aware of the criteria and application processes in order to take full advantage of these benefits.

For assistance with assessing your eligibility for transfer duty concessions or exemptions, please feel free to contact our property team:

Ron Zucker 0410 590 111

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Julia Zou 0426 670 202