KEY TAKE-OUTS
- The State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 makes changes to the Duties Act 1997 and the First Home Owner Grant (New Homes) Act 2000
- Australian Defence Force Members are now eligible to receive a deferral of duty when purchasing off-the-plan property without the need to meet the residence requirement
- The First Home Owner Grant (New Hones) Act 2000 has been amended to clarify that a First Home Buyers eligibility for the grant where they purchase vacant land and enter into a building contract will be determined at the date the Contract is completed
Australian Defence Force members
For around 59,000 people who are permanent Australian Defence Force members (that’s roughly 0.23% of the Australian population), it’s pleasing to hear the changes introduced under the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 which received assent on 19 May 2022.
What has changed for Australian Defence Force members?
Prior to the introduction of the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022, non-foreign Purchasers of property in New South Wales were entitled to receive a deferral of payment of transfer duty (formerly called stamp duty) for the purchase of an off-the-plan property where they met the ‘residence requirement’. The residence requirement set out in the Duties Act 1997 states that the property must be used and occupied by the Purchaser as their principal place of residence for a continuous period of at least 6 months, with occupation commencing no later than 12 months after the completion of the Contract.
The nature of the employment of permanent Australian Defence Force members means that they are constantly being moved around at a moment’s notice. This presented issues for them being able to meet the residence requirement. It has now been recognised and the Duties Act 1997 has been amended to state that the residence requirement does not apply to the Purchaser/s where at least one of them is a member of the Permanent Forces of the Australian Defence Force and Purchaser/s are enrolled to vote in State elections.
What does this mean?
This means that permanent Australian Defence Force members are now entitled to receive the benefit of deferring payment of transfer duty for the purchase of an off-the-plan property without the need for them to meet the residence requirement. It means that instead of having to pay the transfer duty within 3 months of the Contract date, they can pay it 15 months after the Contract date or on completion of the Contract, whichever is earlier.
For the purchase of an off-the-plan property valued at $850,000 it means the permanent Australian Defence Force member doesn’t need to pay the transfer duty of $33,360 within 3 months of the Contract date (unless completion of the Contract occurs within that timeframe in which case for anyone purchasing the property the transfer duty must be paid on or prior to settlement). It means they have more time to save for the transfer duty or in the instance they already have the funds, it means the funds can remain with them for longer and potentially earn interest or off-set other liabilities such as an existing mortgage.
How much is the First Home Buyers Grant?
The First Home Owner Grant (New Homes) Act 2000 provides a $10,000 grant to First Home Buyers who buy or build a new home. The home can be a house, townhouse, unit or similar that is newly built, purchased off the plan or substantially renovated.
Caps apply and they are set out below:
- For the purchase of a new home the purchase price must not exceed $600,000
- For the purchase of vacant land where the First Home Buyer enters into a Building Contract, the value of the land plus the value of the Building Contract (total combined cost) must not exceed $750,000
First Home Buyers Grant 2022 changes
Prior to the introduction of the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022, for First Home Buyers who purchased vacant land and entered into a Building Contract, it was possible for them to enter into variations after the Building Contract was first entered into that took the total value of the transaction (value of land plus value of Building Contract) above the cap and still claim the grant.
The First Home Owner Grant (New Homes) Act 2000 has been amended by the State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 to now clarify that in the instance where a First Home Buyer purchases vacant land and enters into a Building Contract, their eligibility for the grant will be determined at the date the Contract is completed.
What do the changes mean?
This means that any post-Contract variations to the building will form part of the total combined value of the land and build. For example, if a First Home Buyer purchased land at $440,000 and entered into a Building Contract for $300,000 you might consider them eligible for the grant because the total value is under $750,000. However, in the instance they entered into post-Contract variations to upgrade some of the inclusions after the Building Contract was first entered into, at a cost of say $25,000, then total combined value of the land and house is considered $765,000 – making them ineligible for the grant.
ABOUT MELINA COSTANTINO
Melina joined the Coutts team in 2010 working as a Licenced Conveyancer within our Property & Conveyancing team, based out of our Campbelltown lawyers office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
Melina Costantino
Senior Licensed Conveyancer & JP
info@couttslegal.com.au
1300 268 887
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
