Citizen / PR or Non-Resident – Stamp Duty requirements

Stamp Duty where one party is a Citizen or PR, and the other is Non-Resident

When you buy or acquire property in Victoria, you have to pay land transfer duty (also known as stamp duty).

If you are a foreign purchaser and you acquire residential property, as well as land transfer duty, you have to pay foreign purchaser additional duty (for acquisitions on or after 1 July 2016, the additional duty rate is 7%) on the share of the property you acquired. Therefore, if you are purchasing as joint tenants, your share is 50%. If you are purchasing as Tenants-in-common, your share of the property acquired will be that nominated by you.

The additional duty is calculated on the dutiable value of the non-resident’s share of the residential property, which is the greater of the price paid for, or the market value of, the property/land, prior to any land transfer duty concessions being applied.

To calculate the total duty payable, including additional duty:

1. Calculate the land transfer duty in the usual way, applying any relevant concessions;
2. Then, calculate the additional duty on the non-resident’s share of the dutiable value of the property (ignoring any concessions that reduce dutiable value); and
3. Add the land transfer duty amount in step 1 to the additional duty amount in step 2 to determine the total duty amount payable for the transfer.

Please note that if the property acquired is exempt from land transfer duty, the additional duty does not apply.

Therefore, if you are a foreign purchaser, you may be entitled to an exemption from additional duty if you purchase a principal place of residence jointly with your spouse/domestic partner who is an Australian Citizen, Permanent Resident or New Zealand Citizen who holds a special category visa. You must, however, live in the property as your principal place of residence for a continuous period of 12 months, starting within 12 months of becoming entitled to possession of the property.

You can apply to the State Revenue Office to vary this requirement to:
• reduce the 12 month residence period,
• determine that a temporary absence from the residence does not break the continuity of residence, or
• extend the period in which the residence must begin.

This exemption is available for transfers from 14 June 2018.

It is also worth noting that additional duty applies to any arrangement or transaction involving the transfer of an interest in residential property to a foreign purchaser, including:
• Buying a residential property at, for example, auction or by private sale;
• Buying a non-residential property with the intention of converting it to residential property;
• Being given a residential property as a gift; and/or
• Certain leasing arrangements in respect of residential property.

 

We invite you to contact us if you require further information and/or assistance with identifying and managing your obligations in relation to Stamp Duty requirements.

Disclaimer: The information contained in this briefing is general in nature, not intended to be definitive, and does not take into account specific circumstances.

It is recommended that you seek appropriate legal advice as to the application of the taxes discussed in this briefing to your specific circumstances.