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Who’s exempt from stamp duty?

6 October 2014

Stamp duty and its place in the property market has been an ongoing topic in 2014. REINSW has been lobbying for the review of stamp duty and other taxes as it severely impacts consumers ability to enter or remain in the property market. However, not all home buyers are slapped with the same stamp duty obligations.

Under section 278 of the Duties Act 1997 (NSW), stamp duty is not chargeable where a Department of Housing tenant obtains at least 25 per cent beneficial ownership in land and intends to occupy it as their principal place of residence.

Where the tenant obtains less than 100 per cent of the beneficial ownership of the land, the other purchasers must be a ‘natural persons’ and the Chief Commissioner must be satisfied that each of those other purchasers is a member of the tenant’s family or a person who is genuinely assisting the tenant to acquire the land as his or her principal place of residence.

State Taxes Consultant Joanne Seve said this stamp duty exemption was introduced to encourage eligible tenants to buy their first home and to free up public housing.

“The exemption is conditional on the eligible tenant meeting the residence requirement of occupying the land concerned as their principal place of residence for a continuous period of at least six months with such occupation starting within 12 months, or longer period as the Chief Commissioner may approve, after the completion of the sale or transfer of the land,” Ms Seve said.

“The Chief Commissioner may, if satisfied that there are good reasons to do so in a particular case, shorten the period of the residence requirement or exempt an eligible tenant from compliance.

“The following is an extract from the Second Reading Speech (in the NSW Legislative Council on 13 December 1988) to the Stamp Duties (Amendment) Bill 1998 which, on enactment, introduced the exemption:”

The exemptions for Department of Housing tenants relate to the duty on the purchase of land by a tenant and on any mortgage executed to finance the purchase. This concession, along with other Department of Housing initiatives, will assist tenants in purchasing their own homes. This will free up public housing stock and shorten the waiting time of those needing public housing.

Other types of tenants who are eligible for the stamp duty exemption are tenants of the Aboriginal Housing Office and tenants under the Community Tenancy Scheme administered within the Department of Family and Community Services.

First home buyers

Although there are other initiatives for consumers entering the property market, the First Home Buyers benefits have been dramatically limited over the years.

“In addition to the Department of Housing tenants, and other eligible tenants, there are others who would benefit from a similar exemption from stamp duty,” Ms Seve said.

“Currently, the First Home Buyer exemption from stamp duty is only available for “new” (i.e. not existing) homes and is capped at $550,000, with a concession from $550K to $650K. Non-first home buyer co-owners must be natural persons that do not own more than 5 per cent compared to up to 75 per cent under the Department of Housing tenants exemption.”