22/06/2010 - Buyers benefit from New Stamp Duty Exemptions

1. NSW HOME BUILDERS BONUS

What agreements or transfers are eligible?

The following types of agreement or transfer are eligible for consideration under the scheme:

a) A new home purchase. That is an agreement for the sale or transfer of land that is the site of a new home that is complete and ready for occupation.
b) An off the plan purchase. That is an agreement for the sale or transfer of land intended to be used as the site of a new home, which is to be built before completion of the agreement.
c) A vacant land purchase. That is an agreement for the sale or transfer of vacant land that is intended to be used as the site of a new home and which is not an off the plan purchase.

When does it apply?

It applies to eligible agreements for sale or transfer entered into on or after 1 July 2010 and before 1 July 2012 (other than transfers relating to agreements entered into prior to 1 July 2010).

Are there value limits?

Yes.

a) $600 000 in the case of a new home purchase or an off the plan purchase, or
b) $400 000 in the case of a vacant land purchase.

What is a new home?

A new home is a home that has not been previously occupied or sold as a place of residence, and includes a home that is a substantially renovated home.

What is a substantially renovated home?

A substantially renovated home is a renovated home:

a) that is new residential premises within the meaning of section 40-75(1)(b) of the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth, and
b) that, as renovated, has not been previously occupied or sold as a place of residence.

Under that legislation, 'substantial renovations' of a building are defined as renovations in which all, or substantially all, of a building is removed or replaced. The renovations may, but need not, involve the removal or replacement of foundations, external walls, interior supporting walls, floors, roof or staircases.

Must the purchasers be natural persons?

No, the purchaser can be any entity, including natural persons, a company, or trustee of a trust.

Is there any residency requirement?

No, there is no requirement for the purchaser to live in the home.

For a vacant land purchase when must the home be built?

a) The laying of foundations for the home must commence within 26 weeks after the agreement for sale or transfer is entered into, or within any longer period allowed by the Chief Commissioner, and
b) building work must be completed within 18 months after the laying of foundations for the home begins, or within any longer period allowed by the Chief Commissioner.

What is a home?

A home is a building (affixed to land) that:

a) may lawfully used as a place of residence, and
b) is, in the Chief Commissioner’s opinion, a suitable building for use as a place of residence.

A building suitable for a place of residence includes a house, a unit or flat, a townhouse, a villa home, or any other type of self-contained dwelling affixed to land, (including a manufactured home as defined in the Local Government Act 1993) where evidence can be provided that the local Council is satisfied that the dwelling can be occupied as a place of residence.

A building is not suitable for occupation as a place of residence, for example, if the building is a shed or a factory.

For an off the plan purchase when must the agreement be completed?

For eligible agreements entered into on or after 1 July 2010 and before 1 July 2011, the agreement must be completed by 31 December 2012. For eligible agreements entered into on or after 1 July 2011 and before 1 July 2012, the agreement must be completed by 31 December 2013.

When must applications be made?

Applications must be made within three months of the date of the agreement for sale (or transfer where there is no preceding agreement). This includes off the plan purchases.

The Chief Commissioner may accept an application after expiry of the three month period if satisfied that the delay in making an application was caused by circumstances beyond the control of the applicant or applicants.

Is there an application form?

Yes the relevant application form will be on the OSR website prior to 1 July 2010.

What duty is payable?

For an off the plan purchase where construction of the home has not commenced as at the date of the agreement for sale, and for a vacant land purchase (being land valued up to $400 000 on which a home will be built), no duty is payable.

For a completed new home purchase or an off the plan purchase where construction has commenced as at the date of the agreement, the amount of duty payable is reduced by 25 per cent.

When must duty be paid?

For a new home purchase, within three months of the date of the agreement for sale.

For an off the plan purchase where construction has commenced, within three months of either:

a) completion of the agreement;
b) when the purchaser assigns their interest in the agreement; or
c) 12 months from the date of the agreement,

whichever occurs first.

When does construction of a new home commence?

Construction of a new home commences at the time when the laying of the foundations of the new home, or of the building in which it is located begins.

When does construction of a substantially renovated home commence?

For an off the plan purchase of a substantially renovated home, construction commences when construction of new or replacement parts of the home, or the building in which it is located, begins. Demolition work does not count as construction work. This would be applicable for example, where you are buying premises (such as a warehouse or factory unit), and under the terms of the agreement it will be a new home on completion.

Does the scheme apply to replacement agreements?

An agreement for the sale or transfer is not eligible if:

a) it replaces an agreement made before 1 July 2010, and
b) the replaced agreement was an agreement for the sale or transfer of substantially the same property.

Must the land be zoned residential?

No, there is no requirement that the land is zoned residential.

Can the home or land be used for other purposes?

An agreement or transfer is not eligible if the new home, or the land on which the new home is located or to be built, is intended to be used for any purpose other than residential (such as a commercial, industrial or professional). However, an agreement for the purchase of a farming property on which there is a new home or on which a new home is to be constructed is eligible for consideration.

Must the agreement be for the whole of the land?

The agreement or transfer must be for the whole of the land or, if the land is a parcel of land on which two or more homes are built, or are being built (such as a duplex), for one of those homes.

Can I get the exemption or concession more than once?

Yes.

Can the applicant also apply for First Home Plus?

The applicant can apply under this scheme or the First Home Plus Scheme (but not both).

Can the applicant also apply for the First Home Owner Grant?

Yes, eligible applicants can apply for the Grant.

What if my contract is aggregated with another contract?

The 25 per cent reduction is to be applied only to the duty that would be chargeable on the eligible agreement or transfer.

Can I get the exemption or concession if I’m purchasing an existing home to knock down and build a new home on the land?

No, the agreement must be for the purchase of vacant land on which you are going to build a home, or a purchase of a completed new home or a new home off the plan.

Can the agreements or transfers be stamped on EDR?

An off the plan purchase where construction has commenced as at the date of the agreement, can not be stamped on EDR. These will need to be lodged with OSR.

All other transactions under the scheme can be stamped on EDR. The relevant application form must be completed and the transaction processed within three months of the date of the agreement for sale. An EDR process bulletin will be issued shortly.

For an off the plan purchase where construction has commenced, what do I need to lodge at OSR?

The relevant agreement for sale and application form must be lodged within three months of the date of the agreement. The agreement will be retained by OSR until the duty is paid.

Can an application be approved in advance?

Yes, the Chief Commissioner may approve an application in relation to any agreement or transfer in advance of the requirements of the scheme being met, provided the necessary application form and evidence is produced.

2. SENIORS PRINCIPAL PLACE OF RESIDENCE EXEMPTION

When would the Seniors Principal Place of Residence Exemption apply?

It applies where the agreement or transfer falls within the New Housing concession category (that is a completed new home purchase or an off the plan purchase where construction has commenced) and the agreement or transfer meets the following additional criteria:

i) all of the purchasers are aged 65 or over, or the spouse of a purchaser aged 65 or over
ii) the eligible senior (and spouse, if any) must move into the home within 12 months of completion of the agreement or transfer and occupy the property as their principal place of residence for a continuous period of at least 12 months
iii) the eligible senior must have owned and occupied a home in NSW within the 12 months before the date of the current agreement for sale
iv) the eligible senior (and spouse, if owner) must dispose of such former home either prior to, or within 6 months of completion of, the current agreement for sale.

Who is an eligible senior?

A person is an eligible senior if:

a) the person is 65 years of age or older, and
b) the person is an Australian citizen or permanent resident, and
c) neither the person, nor the person’s spouse (if any), has previously had the benefit of the senior’s principal place of residence exemption.

Are there value limits?

Yes. The value of the property the subject of the agreement or transfer must not exceed $600 000.

When must applications be made?

Applications must be made within three months of the date of the agreement for sale (or transfer where there is no preceding agreement). This includes for off the plan purchases.

The Chief Commissioner may accept an application after expiry of the three month period if satisfied that the delay in making an application was caused by circumstances beyond the control of the applicant or applicants.

Is there an application form?

Yes, the relevant application form will be on the OSR website prior to 1 July 2010.

Can seniors apply for the New Housing exemptions?

Yes, for an off the plan purchase where construction has not commenced, and a vacant land purchase, seniors should apply for that exemption. The relevant application form must be completed within three months of the date of the agreement for sale. This form will be available on the OSR website before 1 July 2010.

What is a new home?

A new home is a home that has not been previously occupied or sold as a place of residence, and includes a home that is a substantially renovated home.

What is a substantially renovated home?

A substantially renovated home is a renovated home:

a) that is new residential premises within the meaning of section 40-75(1)(b) of the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth, and
b) that, as renovated, has not been previously occupied or sold as a place of residence

Under that legislation, 'substantial renovations’ of a building are defined as renovations in which all, or substantially all, of a building is removed or replaced. The renovations may, but need not, involve the removal or replacement of foundations, external walls, interior supporting walls, floors, roof or staircases.

Can the Chief Commissioner vary the residence requirement?

Yes if satisfied there are good reasons to do so, the Chief Commissioner can approve a shorter period of occupation or exempt an eligible senior from the residence requirement.

Can the Chief Commissioner approve a longer time to dispose of the former home?

Yes if the delay in disposing of the former home is caused by circumstances beyond the control of the eligible senior.

When is the former home considered disposed?

A person disposes of a home if the person ceases to be the owner of the home. Generally that would be at completion of the sale of that home.

Can I get the Seniors Principal Place of Residence Exemption more than once?

No, neither the person nor the person’s spouse can have previously had the benefit of the senior’s principal place of residence exemption.

For an off the plan purchase when must the agreement be completed?

For eligible agreements entered into on or after 1 July 2010 and before 1 July 2011, the agreement must be completed by 31 December 2012. For eligible agreements entered into on or after 1 July 2011 and before 1 July 2012, the agreement must be completed by 31 December 2013.

Does the scheme apply to replacement agreements?

An agreement for the sale or transfer is not eligible if:

a) it replaces an agreement made before 1 July 2010, and
b) the replaced agreement was an agreement for the sale or transfer of substantially the same dutiable property.

Can the home or land be used for other purposes?

An agreement or transfer is not eligible if the new home, or the land on which the new home is located or to be built, is intended to be used for any purpose other than residential (such as a commercial, industrial or professional). However, an agreement for the purchase of a farming property on which there is a new home or on which a new home is to be constructed is eligible for consideration.

Must the agreement be for the whole of the land?

The agreement or transfer must be for the whole of the land or, if the land is a parcel of land on which two or more homes are built, or are being built (such as a duplex), for one of those homes.

What if the eligible senior is the purchaser under and agreement for sale and a transfer from the vendor to a ‘related person’ is executed?

The agreement would not be eligible as there can be no other purchasers or transferees, other than the spouse of an eligible senior who is a purchaser or transferee.

The same would apply in the reverse situation where the eligible senior was not a purchaser under the agreement but a transferee only and a ‘related person’ was the purchaser. Section 18(3) of the Duties Act 1997 refers.

Can Seniors Principal Place of Residence Exemption transactions be stamped on EDR?

Yes, the relevant application form must be completed and the transaction processed within three months of the date of the agreement for sale. An EDR process bulletin will be issued shortly.

Can an application be approved in advance?

Yes, the Chief Commissioner may approve an application in relation to any agreement or transfer in advance of the requirements of the scheme being met, provided the necessary application form and evidence is produced.