Stamp duty exemptions for spousal property transfers


Stamp duty exemptions for spousal property transfers

Land transfer duty (formerly referred to as stamp duty) is a Victorian state government tax applied to the purchase of property. The amount payable depends on a number of factors, including the value of the property, the type of property and whether any stamp duty exemptions apply. In this blog, we are looking at the stamp duty exemption for a spousal transfer.

What is a spousal transfer?

A spousal transfer is a transfer of residential property between partners, whether married or in a domestic relationship. In Victoria, only a transfer of property that is the principal place of residence (eg, a family home) and which is transferred between partners for no consideration will be exempt from stamp duty.

A similar exemption may apply if the transfer of the property is a result of the breakdown of a marriage or domestic partnership.

Why do property owners do a spousal transfer?

There are a number of reasons why spouses or partners may wish to transfer their main residence between each other. These may include the following:

  • In the case of a breakdown in the relationship, the transfer is in accordance with a family law settlement or court orders.
  • In the case of a new relationship, the spouse or partner with existing ownership in the property may wish to add the new spouse or partner to the title.
  • Where both spouses or partners are on title, they may transfer the property into one spouse or partner’s name to safeguard the asset.

Spouses should seek independent legal, accounting and/or financial advice before making a decision to transfer property between themselves.  

Need advice? Call 03 9014 1299

Eligibility for stamp duty exemption for spousal transfers

To be considered for a stamp duty exemption for a spousal transfer, there are a few requirements that need to be met:

  • The property must be a principal place of residence, meaning that one person in the relationship must move into the property within 12 months of the transfer (if they are not already living there). They must live at the property as their principal place of residence for a minimum continuous period of 12 months. If this requirement is not met, you will need to explain to the State Revenue Office, to its satisfaction, the reason why you are unable to meet the 12-month principal place of residence requirement.
  • There must be no consideration (for example, no payment, loan or gift) for the transfer of the property.
  • If there is to be a mortgage after the transfer, it must be for the same or greater amount as the outstanding amount before the transfer, and the partner receiving the property must assume the liabilities under the mortgage.
  • Spouses and partners must not transfer property in order to take advantage of this exemption. The commissioner will be satisfied that the transfer is genuine where the mortgage is:
    • due to a good faith refinancing of a mortgage created at or before the time of the transfer;
    • created at or before the time of the spousal or partner transfer;
    • created to secure a loan to be applied to improving the property.

Can I transfer only half my property to my spouse and avoid stamp duty?

Consider this scenario

  • Jenny owns a home that she resides in and was single at the time she purchased the property.
  • She has a mortgage on the property.
  • Jenny meets Michael four years after purchasing her property and 12 months later, Michael moves in with Jenny.
  • Michael begins sharing the mortgage costs.
  • Twelve months after moving in, Jenny wants to transfer the property ownership from her to both of them as joint tenants.

Will stamp duty be payable in this scenario?

Duty is not payable on the transfer but Michael must assume the liabilities of the mortgage.

Is stamp duty payable when transferring to a spouse after death?

If partners or spouses are named on title of the principal place of residence as joint tenants and one partner or spouse dies, then the surviving partner or spouse may make an application as the surviving spouse to have the title transferred into their sole name. This application does not attract stamp duty.

A further exemption for transfers between spouses exists where the transfer is made in accordance with the terms of a Will or Codicil on the death of a partner or spouse.

Transfer of real property by an executor to a beneficiary under the Will must be made strictly in accordance with the terms of the Will or Codicil to be eligible for the exemption.

Get help from a property lawyer

At David Davis, our team is highly experienced in conveyancing and property law. If you have a property you wish to do a spousal transfer on or if you have any other property or stamp duty queries, please contact us.

Contact David Davis Lawyers

Phone: 03 9014 1299

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