If you’re looking to downsize and get ready for the next stage of your life, make sure you do your research when it comes to stamp duty exemptions for retirees.
While money can’t buy you happiness, it can provide greater freedom and flexibility, which is why many of us heading into retirement take a good hard look at what we do and don’t need in terms of our material possessions and responsibilities.
As we age, our day to day earnings and expenses are expected to change, and controlling costs is an essential way to plan for any retirement blueprint. If you’re on a fixed income, downsizing can be an effective way to cut costs and shift funds to other things you wouldn’t mind actually paying for, such as travel.
If you’re a homeowner, you might be considering taking this step for a variety of reasons: it could be to boost your finances, reduce your expenses, help you pay for care, or to move into a more suitable home, a better location or you might even just want to take advantage of the current property boom. However, nothing in this life is certain except death and taxes, and you can be sure that the latter applies on the sale of your home – but is there a way around it?
Understanding Stamp Duty Exemptions In Australia
Stamp duty is a government tax on certain transactions, and Australians generally need to pay it when they buy a motor vehicle, insurance policy or real estate. While stamp duty on a property can also be known as “land transfer duty”, the amount that applies to a transaction varies depending on where you live, the type of transaction taking place, and its value.
However, the Federal Government is doing its bit to try and encourage future or current retirees to downsize from their family home into smaller dwellings, such as apartments and units, in a bid to provide more supply to meet the growing market demand.
From 1 July 2018, those aged 65 years old and up can make a downsizer contribution into their superannuation of up to $300,000 per spouse from the proceeds of selling their family home. The real kicker of this policy is that the voluntary contribution is not classed as a non-concessional contribution, meaning that it doesn’t count towards the relevant contribution caps in place. In 2021, Treasurer Josh Frydenberg announced that the Downsizing Initiative will be extended to those 60 years old and up.
Despite this, just four of the states and territories offer stamp duty exemptions or concessions – the Australian Capital Territory, the Northern Territory, Tasmania and Victoria, with the latter arguably being the most lucrative.
In Victoria, if you are an eligible pensioner, you may be entitled to either a one off:
- Exemption from duty when you buy a home valued at $330,000 or less; or
- Concession from duty when you buy a home valued from $330,001 to $750,000.
To apply for the stamp duty exemptions or concessions in Victoria via the State Revenue Office, applicants will require:
- Particulars of the transactions, including title details, land use entitlements (if applicable), type of property and transfer (related parties)
- Occupancy requirement of the property
- Previous claims and eligibility
- Concession card details of all applicants
- Original and completed transfer of land or land use entitlement form.
- A copy of both sides of your concession card.
In addition, for homes constructed after transfer, applicants must also supply:
- A complete copy of the certificate of occupancy showing the mandatory inspection stages
- A complete copy of the building contract (if applicable)
- If you are an owner/builder, receipts and a statement itemising construction costs not referred to in the building contract
In order to understand how the stamp duty exemptions for retirees in Victoria could potentially apply to you, we’ve included two examples below.
Both Lee and Lisa are eligible pensioners. They buy their home together for a total price of $600,000. They each own 50% of the property so their share is $300,000 each. The current threshold limit for a pensioner exemption is $330,000. Both Lee and Lisa are entitled to the exemption, so no duty is paid on the transfer of the property.
In comparison, both George and Cathie are eligible pensioners too. They buy their home together for a total price of $800,000 and a 50/50 split. George’s and Cathie’s share equates to $400,000 each which means they are not under the $330,000 threshold and duty does apply, however at a discounted rate. Stamp duty will be $11,290 instead of $43,070 saving them over $31,000 in stamp duty.
Stamp duty calculations may vary depending on the location of the property and whether it is an existing property of a new build. Please refer to the state revenue calculator to check your circumstances and calculation.
If it’s been a while between property transactions for you – which isn’t uncommon – it’s important to find trusted and reputable figures within the real estate industry who can help guide you regarding the relevant state policies and procedures – but where do you start?
Take The Stress Out Of Selling Property
A completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.
This blog does not consider your financial situation, needs and objectives. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal; tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.
