Latest News50% Saving on Transfer DutyMonday, 15 August 2016

The State Government announced a NSW Housing Construction Acceleration Plan (HCAP) in the NSW Budget 2009-10.

In short, the HCAP means that transfer duty on certain contracts for sale or transfers of certain residential property in NSW will be cut by 50%.

The HCAP will apply to anyone other than persons eligible for a First Home Owner Grant or for NSW First Home Plus stamp duty benefits.

The HCAP will only be available:

• to an agreement for sale or a transfer (with no prior contract) of a new home that is, a home that is complete and ready for occupation that has not previously been occupied or sold as a place of residence (and this can include a substantially renovated home);

• executed on or after 1 July 2009 and before 1 January 2010;

• where the dutiable value does not exceed $600,000;

• where the whole of the land is sold or transferred or, if the land is a parcel of land on which two or more homes are built, or are being built, where the Chief Commissioner is satisfied the property is an exclusive occupancy;

• where the home and the land on which the home is located are intended to be used only for residential purposes and purposes ancillary to use and occupation for residential purposes and not for commercial, industrial or professional purposes;

• in the case of an off the plan purchase, the agreement must state that the sale or transfer must be completed before 30 June 2011 or, in any other case, the agreement must be completed before 30 June 2011. The Chief Commissioner has a discretion to extend this date where delay is beyond the control of the parties;

• where none of the transferees is eligible for the First Home Owner Grant or for NSW First Home Plus stamp duty benefits; and

• where application for the HCAP is made in approved form and is approved by the Chief Commissioner.

The HCAP can be claimed more than once provided the that all of the eligibility criteria are satisfied.

There is no limit on the age of a new home. So long as the home has not previously been occupied or sold as a place of residence it can be a "new home".

If a contract for purchase of a new home has already been entered into before 1 July 2009, both the contract and the transfer (even if the transfer is made on or after 1 July 2009) will be ineligible for the HCAP and any replacement agreement for such an existing contract that is made on or after 1 July 2009 will also be ineligible.

Vacant land

To be eligible for the HCAP, the contract or transfer must be completed after the new home has been built. The purchase of a vacant block without a new home that is complete and ready for occupation at the time of the transfer of the land will be ineligible for the new HCAP. This means that the 100% rate of transfer duty will still apply to the transfer of vacant land in NSW.

In some circumstances, the transfer duty payable on the transfer of a vacant block could actually be less than the HCAP 50% rate of transfer duty payable on the transfer (or agreement to transfer) of the land plus new home. This means that calculations should be undertaken to determine if it might be preferable for a purchaser to purchase and take a transfer of vacant land and subsequently build a new home on it, rather than taking a transfer of the land plus a new home where the HCAP conditions are satisfied.

Example 1

Vacant land cost: $300,000

Transfer duty at 100%: $8,990

Land plus new building/residence cost: $500,000

Transfer duty at 50% = $17,990/2 = $8,995

Example 2

Vacant land cost: $300,000

Transfer duty at

Land plus new building/residence cost: $550,000

Transfer duty at 50% = $20,240/2 = $10,120

$1,130 more duty under HCAP

100%: $8,990

 

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