How the Stamp Duty Exemption Applies to Transfers Between Married and De Facto Partners
How the Stamp Duty Exemption Applies to Transfers Between Married and De Facto Partners
In Victoria, transfers of residential property between married spouses and de facto partners may qualify for a stamp duty exemption where certain requirements are satisfied. The exemption can be particularly valuable when couples are restructuring ownership of a family home, estate planning, refinancing or adjusting property interests as part of broader financial arrangements.
When is the exemption commonly used?
The exemption can be used for a variety of reasons depending on a couple’s specific circumstances, but is most commonly taken advantage of where:
one partner wishes to transfer all or part of their interest in a home to the other partner;
spouses wish to hold property jointly rather than in one name;
ownership arrangements are being adjusted as part of financial planning or business structuring;
couples are refinancing and restructuring property ownership; or
estate planning arrangements require a change in ownership.
The exemptions of stamp duty are applicable for transfers of property between married or de facto partners when:
the property is residential; [Section 43(2)(c) of the Duties Act 2000 (Vic)]
the transferor and transferee are married or in a de facto relationship; [Section 43(a) of the Duties Act 2000 (Vic)]
there is no consideration for the transfer; [Section 43(2)(b) of the Duties Act 2000 (Vic)]
at least one spouse or partner lives in the property as their primary place of residence for at least 12 months following the date of the transfer; and [Section 43A(1) of the Duties Act 2000 (Vic)]
no other person receives an interest in the property besides the individuals in the spousal or de facto relationship. [Section 43(2)(a) of the Duties Act 2000 (Vic)]
If these requirements are satisfied, then it is likely that duty will be exempt from the transfer of property between married or de facto partners.
What is a residential property?
A residential property is a property that is suitable of being occupied as a place of residence or accommodation. As such, a residential property provides shelter and includes basic living facilities. This may include houses, units, flats, and more.
What does ‘no consideration’ mean?
The term ‘no consideration’ means that the property being transferred from one married or de facto partner to another is transferred as a gift with no money, goods, services or other value exchanged in return.
In relation to mortgages, couples can satisfy this requirement if a spouse or partner transferee: [Section 43AA(1) of the Duties Act 2000 (Vic)]
gives a mortgage to secure the same or a greater amount as that outstanding under the mortgage immediately before the transfer; or
assumes the liabilities under the mortgage.
The Commissioner of State Revenue is satisfied that couples are not taking advantage of the exemption of duty if: [Section 43AA(2) of the Duties Act 2000 (Vic)]
the mortgage was created at or before the time of the transfer; or
the mortgage was part of a genuine re-financing of a mortgage created at or before the time of the transfer; or
the mortgage was created to secure borrowings that have been applied to the improvement of the property.
What is the primary place of residence requirement?
As part of the exemption of duty, it requires that the person who received the exemption occupies the property as their principal place of residence for at least 12 months commencing within the 12-month period immediately after the transfer.
The requirement for the primary place of residence is also complied with if the land is occupied by either person listed in the transfer, whether separately or together, for the whole 12-month continuous duration. [Section 43A(2) of the Duties Act 2000 (Vic)]
If the Commissioner of State Revenue is satisfied, they may vary the residence requirement for the exemption of duty. [Section 43B of the Duties Act 2000 (Vic)]
How about third-party interest in the transfer of land between married or de facto relationships?
No outside party can receive an interest in the property from the transfer of land between married or de facto relationships. This may include being deployed whilst serving in the army, or in instances of domestic violence.
KCT Legal can advise on the legal requirements for stamp duty exemptions on transfers of land between married and de facto partners. We can assist in assessing eligibility, preparing the necessary legal documentation and ensuring the transfer complies with the relevant legislation.
This article is provided for general information only and does not constitute legal advice. The information may not be appropriate for your particular circumstances. You should obtain specific legal advice before acting or relying on any information contained in this article.