Something else for the grey nomads

We had an interesting matter cross our desk recently regarding a stamp duty exemption/concession for the purchase of a principal place of residence by persons aged over 70. The matter arose in the context of Victorian property and hence the Victorian Duties Act 2000.

Subject to certain eligibility conditions there is a stamp duty exemption/concession where the terms of Division 5, Chapter 2 of the Victorian Duties Act 2000 are met.

The key eligibility criteria are:

• The person is an ‘eligible pensioner’ as defined (must be over 70 years of age and includes a seniors card holder);
• A bona fide purchase of Victoria real property occurs;
• Adequate consideration is paid;
• The land (where a dwelling will be constructed) or building will be used by the person as a principal place of residence;
• The person has not previously received the benefit of the exemption or concession;
• Joint purchasers are individually eligible on their fractional interest (i.e., one or both persons may be eligible where there are joint purchasers);
• Each person’s fractional interest of the dutiable value is tested against the exemption cap (below $330,000) and/or concession cap ($330,000-below $750,000);
• No exemption or concession is available where the dutiable value of the fractional interest exceeds $1,500,000.

In the case we dealt with, there were a number of twists:

• The property was purchased from a related party (father & mother purchased from son);
• The consideration payable was below market value but for adequate consideration;
• Payment was made by way of loan offsets whereby:
  • Partial payment was made by way of the vendor’s indebtedness to a related entity owned by the purchasers being offset against the related entity’s indebtedness to the purchasers; and
  • The balance by way of the Purchaser and Vendor offsetting an existing loan from the Purchasers to the Vendor (an unrelated matter) against the balance of the payment due by the Purchasers.
• The SRO had previously denied the refund claim for a combination of reasons including the above.

A couple of observations

1. If you are interested in learning more about this exemption/concession have a look at the SRO site at click here. By the way we were successful in obtaining a full refund.
2. One always needs to be aware of the myriad of targeted exemptions and concessions embedded in legislation such as this one.
3. The words of the law determine the entitlement. For example, substitution of words like ‘market value’ in administrative guidelines describing the operation of law does not defeat the use of words like ‘adequate consideration’ in the legislative provision.
4. In light of a Division 5, Chapter 2 duty refund and given a duty exemption also applies on a transfer of Victorian real property under a will, a property acquisition by parent/grandparent and a duty free transfer under a will to a child/grandchild could be available.
5. State laws need to be considered individually – whether an exemption/concession exists in other jurisdictions or applies the same way cannot be assumed.