Must run 19/6/08

Shifts in Stamp Duty and Land Tax

Legal Comment by Mark Illidge

More good news for first homebuyers, and at last some good news for the elderly. The 2008/09 State Budget increased the first homebuyer transfer duty exemption from $320,000 to $350,000 effective 1 July 2008. Then from 1 September 2008, the first homebuyer transfer duty exemption will be further increased to $500,000, which will provide potential savings of up to $9,500 when compared with the current stamp duty rates. Furthermore, the budget has revised and simplified the transfer duty rate structure which will result in a reduction of stamp duty on purchases of all property up to $590,000. However, to compensate for lost revenues at the lower end of the market, stamp duty on properties valued above $980,000 will be increased from the current 4.5% to 5.25%.

The abolition of mortgage duty has been bought forward to 1 July 2008, six months earlier than scheduled.

We will also see revised land tax schedules effective 1 July 2008. The current $600,000 threshold for resident individuals has been maintained with the tax payable at that threshold to be reduced from $1,200 to $500. Land tax relief has also been provided for companies, trustees and absentees. The current $350,000 threshold has been maintained with the tax at that threshold reduced from $2,250 to $1,450.

The budget also provided a package of concessions to assist older people, including:

• Extending the transfer duty home concession to retirement village residents who enter into lease arrangements;
• Extending the ‘principal place of residence’ land tax exemption when the owner is absent due to illness or care requirements; and
• Reducing the application of the land tax provision that provided for retrospective assessment of land tax on the subdivision of a principal place of residence.

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