Pensioner duty exemption or concession
If you are an eligible pensioner, you may be entitled to a once-only:
- exemption from duty when you buy a home valued at $330,000 or less, or
- concession from duty when you buy a home valued from $330,001 to $750,000.
If you are buying your first home, you may also be entitled to:
- A first-home buyer duty reduction if you signed the contract for your purchase before 1 July 2017.
- The first-home owner duty exemption or concession if you signed the contract for your purchase on or after 1 July 2017.
- The First Home Owner Grant regardless of the date you signed your contract.
However, you can only receive the pensioner duty exemption/concession or the duty benefits available to first home buyers in respect of the same transaction. You cannot get both. You must choose to receive one or the other. Whichever you choose, you may still be eligible for the first home owner grant if you are buying your first home.
Are you eligible?
To receive this benefit, you must:
- Hold of one of the approved concession cards at the date of the transfer, which is the settlement date.
- Buy the property for market value.
- Intend to live in the home as your principal place of residence.
The home can be:
- An established home.
- A home bought off-the-plan, such as a house and land package where the person who sells you the land also builds the home as part of the agreed price.
- A home that is built within three years of you acquiring the vacant land.
How the exemption or concession applies
Generally, a full exemption from duty is available for homes valued up to $330,000 and a concession is available for homes valued from $330,001 to $750,000.
The way the exemption or concession is calculated varies, depending on the type of property you bought and its value. The key values for calculating the exemption or concession are:
- For established homes, the exemption or concession is based on the dutiable value of your property. This is the purchase price or the market value (whichever is greater) of the land and home.
- For off-the-plan homes, the exemption or concession is based on the:
- contract price for your property, and the
- dutiable value of your property, including the off-the-plan (OTP) concession.
You need to contact your vendor to get the dutiable value of your property, including the OTP concession. Dutiable value in this scenario is calculated using information provided by, and a method chosen by, the vendor.
- For vacant land where you are building a home within three years, the concession or exemption is based on the:
- dutiable value of the vacant land, being the purchase price or the market value (whichever is greater), and
- construction cost of the home.
How the exemption or concession applies to you also depends on the contract date and your interest in the property.
If you are eligible for the pensioner duty exemption or concession, you need the figures for the values involved in your transaction to estimate the duty you will pay.
Building on vacant land
If you buy vacant land and then enter into a contract to build your home within three years, you have to pay the usual rate of duty when you buy the vacant land.
The exemption or concession will only be provided when your home is finished. Generally, this means you must pay the duty within 30 days of settlement on the land and apply for a refund if your home is constructed within three-years of buying the land. You have five years from the date the duty was paid to apply for a refund.
Buying a share in a property
If you are an eligible pensioner and buy a share (also known as a fractional interest) in a property rather than the whole property, the pensioner exemption or concession will be assessed on the value of your share. You must still meet all the requirements to receive the exemption or concession and must not have previously received a pensioner exemption or concession, rebate or refund of duty in respect of a previous transfer.
The duty you pay on the transfer of the property is the total of whatever duty, if any, that applies to all the purchasers.
Example A
Both Christos and Molly are eligible pensioners. They buy their home together for a total price of $600,000. They each own 50 per cent of the property so their share is $300,000 each.
The current threshold limit for a pensioner exemption is $330,000. Both Christos and Molly are entitled to the exemption so no duty is paid on the transfer of the property.
Example B
Both Dan and James are eligible pensioners. They buy their home together for a total price of $600,000. Dan owns 20 per cent and James owns 80 per cent.
Dan’s share equates to $120,000 and as he is under the $330,000 threshold, no duty applies to his interest. James’ share equates to $480,000, which exceeds the exemption threshold but is below the concession threshold. James’ interest is assessed for duty on $480,000 at the pensioner concession rate.
The duty that applies to James’ interest must be paid on the transfer of the property.
You may still be entitled to the exemption or concession even when you buy with another person who is not eligible.
Example C
Avi is an eligible pensioner who buys a home with Elizabeth, who is not an eligible pensioner. They each have a 50 per cent interest in the property. The purchase price is $600,000.
The current threshold limit for a pensioner exemption is $330,000. Therefore, Avi is fully exempt as his 50 per cent interest in the property equates to $300,000.
Elizabeth’s interest in the property is assessed with 50 per cent of the duty payable on $600,000.
The duty that applies to Elizabeth’s interest must be paid on the transfer of the property.
Related party transfers/nominations
The exemption or concession is only available to genuine purchasers who paid at least the market price for their home.
This ensures that duty relief does not benefit those who have purchased their home at a heavily discounted price or received the property as a gift.
For all sales between related or associated parties, we require additional evidence that you have paid at least the market price for your home. This includes:
- Proof of payment of the purchase price (e.g. bank statements, loan agreements and receipts).
- Evidence of the market value of the property, such as a:
- letter of appraisal from a licensed real estate agent that is no more than six months old, or
- valuation, no more than 12 months old, by a certified practising valuer who is a member of the Australian Property Institute or by a member of the Real Estate Institute of Victoria with sworn valuer accreditation.
Can I also get a principal place of residence concession?
If you are entitled to the pensioner concession, you will automatically benefit from the duty concession for a principal place of residence. You do not need to claim this concession.
First home buyer benefits
If you are buying your first home, you may also be entitled to:
- A first-home buyer duty reduction if you sign the contract for your purchase before 1 July 2017.
- The first-home owner duty exemption or concession if you sign the contract for your purchase on or after 1 July 2017.
- The First Home Owner Grant, regardless of the date you signed your contract.
You must meet the relevant eligibility criteria to receive any of these benefits. If you are entitled to receive both the pensioner duty exemption or concession and the duty benefits available to first home buyers in respect of the same transaction, you must choose one of them. Whichever you choose, you may still be eligible for the first home owner grant if you are buying your first home.
Which one should I apply for?
Assuming you are eligible for both, you can use our calculators to compare the amounts of duty you will pay after receiving the benefit that each provides.
Remember, the first home buyer duty exemption or concession is only available on the purchase of your first home. It is not available on subsequent home purchases. The pensioner exemption or concession is available to you only once, but the home you buy does not have to be your first home. It may be available for a subsequent home purchase.
Calculate how much duty you pay as a first-home buyer.
Calculate how much duty you pay as an eligible pensioner.
Ref: State Revenue Office Victoria (Last modified: 23 July 2020). Pensioner duty exemption or concession. Retrieved from https://www.sro.vic.gov.au/Pensionerdutyconcession
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