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Tax Tip 102: Transfers Between Spouses and Stamp Duty in the ACT

Discussion in 'Accounting & Tax' started by Terry_w, 23rd Mar, 2016.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Transfers of Land Between Spouses and Stamp Duty in the Australian Capital Territory


    This is a brief summary involving transfers of land between someone to his or her ‘partner’ for situations that don't involve the breakdown of that relationship (excluding family law related transfers).


    ‘Partner’ for this means (s72):
    Note The dictionary defines partner as a person's spouse or someone with whom the person has a domestic relationship. Domestic relationship is defined in the dictionary to have the same meaning as in the Domestic Relationships Act 1994, s 3.


    Summary
    For ACT land transfer duty will be just $20 where all the following apply:
    · The parties to the transfer are either married, in a domestic 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 or tenants in common in unequal shares that a proportionate to contributions, and
    · The residence the principal residence of the parties at the time of transfer.


    Relevant Legislation
    Section 72 Duties Act 1999 (ACT)
    DUTIES ACT 1999 - SECT 72 Transfer to partner of interest in principal place of residence


    Going from one name to both names possible?
    Yes, the principal place of residence, at the time of transfer, will result in just $20 duty if the transfer results in the property being held as

    (a) joint tenants; or
    (b) tenants in common in equal shares; or
    (c) tenants in common in shares that are proportionate to the contributions of the partners towards the purchase and improvement of the property; or
    (d) tenants in common in shares that are in proportions prescribed by regulation.



    Investment Property?
    No concession available for a property that is an investment property at the time of the transfer.


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


    Consideration?
    There is no requirement for the transfer to be a gift. A transfer at full consideration can still be liable for just $20 duty.


    Tax Issues

    Advice should be sought on transferring the interest for full market value so that any future renting of the property can result in the loan interest associated with the purchase of the property to be deductible.

    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


    For the situation in QLD see Tax Tip 101: Transfers Between Spouses and Stamp Duty in QLD Tax Tip 68: Transfers Between Spouses and Stamp Duty in NSW
     
    Last edited: 23rd Mar, 2016
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  2. mcarthur

    mcarthur Well-Known Member

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    Good one Terry.

    I did this last year using the "Domestic relationship" clause. Solicitor drew up the wording and it went through fine.
    My tfr and exemption though was from two names down to one, and was "for love and affection" - perhaps you could note that it is possible to go from two to one as well?
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Thanks for your comments Mcarthur. However I cannot find any legislation which would exempt duty on the transfer from 2 names to 1 name for land in the ACT.

    Perhaps this was done under s56. Did you pay the consideration for the purchase in full and argue your wife was the aparent purchser and you the real purchaser?
    DUTIES ACT 1999 - SECT 56 Property vested in apparent purchaser
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  5. Elimarie

    Elimarie New Member

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    Have you completed one for Victoria? I would like to transfer my house over to my husband in a few years time.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Next on the list.
     
  7. mcarthur

    mcarthur Well-Known Member

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    Excellent question - no idea sorry!
    Essentially we provided a BFA to explain the situation and attached this to the Transfer by Direction form. On the form we then used the "love and affection" wording in the "consideration" part of the form. The stamp duty was not applied (waived? no idea of the wording sorry). I've done a search and can't find it either, apart from the notation on the form.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  9. mcarthur

    mcarthur Well-Known Member

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    Perfect catch Terry - I did it under clause 4 of that section.

    And relooking at your original wording, I see this doesn't fit under that either as you've specified this is not for a breakdown of a relationship. So I'll withdraw and crawl away :oops:...
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I think all states offer duty concessions on the break down of a relationship. But with these series of tips I am focusing on spouses transferring between each out during intact relationships - mainly as a tax and estate planning strategy.