Tax Tip 101: Transfers Between Spouses and Stamp Duty in QLD

Discussion in 'Accounting & Tax' started by Terry_w, 22nd Mar, 2016.

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  1. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    18th Jun, 2015
    Transfers Between Spouses and Stamp Duty in QLD

    This is a brief summary involving transfers of land between a married or de facto partners where there is no breakdown in relationship.

    Firstly note that ‘de facto partner’ is defined under the Schedule 6 of the Duties Act 2001 QLD as

    “de facto partner means 1 of 2 persons who is a de facto partner within the meaning of theActs Interpretation Act 1954, section 32DA, if the persons are living, and for at least 2 years have lived, together as a couple on a genuine domestic basis within the meaning of theActs Interpretation Act 1954, section 32DA, or have so lived together as a couple for at least 2 years.”


    Relevant Legislation
    Section 151 Duties Act 2001 (QLD)

    DUTIES ACT 2001 - SECT 151 151 Exemption—particular residences

    Going from one name to both names possible?
    Yes, if the main residence and both end up as 50/50 tenants in common or joint tenants then it can be exempt from duty.

    Investment Property?
    No exemption available for investment properties – unless the property will become the principal residence of the parties.

    Transfer from one name to the other name possible?
    No it is not possible to get the exemption where only 1 party will be the final owner. Both parties must be the final owners.

    The exemption only applies for gifts. I.e. if Spouse A pays Spouse B for the transfer of the interest the exemption will not apply.


    For QLD land transfer duty will be exempt where all the following apply:

    · The parties to the transfer are either married, in a de facto relationship or a registered relationship, and
    · One of the parties is transferring to the other, and
    · Both parties will end up owning the land as either joint tenants or tenants in common 50/50, and
    · The residence will be the principal residence of the parties, and
    · The transfer is by way of a gift

    Tax Issues

    Subsection 2 of s151 states that the above can apply even if a liability under a mortgage is assumed by the other party. So Spouse A can transfer 50% of the property owned to spouse B and the loan can remain the same with spouse B being added to the existing loan of Spouse A.

    From a tax point of view the interest on the loan cannot be deductible to spouse B because he/she has not borrowed to purchase 50% of the property. Spouse A’s loan interest would only be deductible on 50% of the balance because only 50% of the property is owned now and the remaining 50% disposed of.

    Transfer of title is a CGT event with the transferee (the one transferring) being the one to pay the CGT unless an exemption, such as the main residence exemption, applies.

    Lending Issues

    Any change in title will mean the mortgage has to be discharged and a new loan applied for under the new owners names. Where both parties are borrowers originally there must still be a discharge of mortgage because title will change from one name to two. This will probably result in a need for the lender to requalify borrowers again.

    See your lawyer before attempting this as many side issues are involved.

    For the situation in NSW See Tax Tip 68: Transfers Between Spouses and Stamp Duty in NSW

    Tax Tip 68: Transfers Between Spouses and Stamp Duty in NSW
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

    18th Jun, 2015
    Many issues can pose a stamp duty concern in QLD that arent a concern in any other state. QLD has indirect stamp duty rules which can impose duty on a change of owner that isnt a change of title. Its very board and catches many issues that arent a sale as such.

    This can apply to a trust interest, a unencumbered partnership interest and many more arrangements that would never pose a concern in other states. It can also severely affect a development JV.

    Competent legal advice is strongly recommended for all QLD property acquisition and if ANY future change is even contemplated in advance then advice taken on QLD stamp duty so that the owners understand the rules. And secondly, once QLD property is acquired do not make any changes to the partners, trust, trust deed, trustee company or ownership without specific legal advice on the QLD Duties Act 2001.
    Terry_w likes this.