The transfer of real estate between spouses or domestic partners is often considered for asset protection and/or taxation purposes. However, the stamp duty implications of any such transfer should also be an important consideration as a significant stamp duty liability may make such a transfer unfeasible (even in light of any asset protection/taxation benefits). The stamp duty implications of any transfer between spouses/domestic partners is particularly relevant following recent changes to stamp duty legislation.
Prior to 1 July 2017, the transfer of real estate between spouses or domestic partners was exempt from stamp duty regardless of the nature or use of a particular property. However, recent legislative changes have significantly reduced the scope of spouse/domestic partners transfers that are exempt from stamp duty. Since 1 July 2017, only transfers of a principal place of residence (PPR) between spouses/domestic partners for no consideration are exempt from stamp duty. For example, the transfer of a residential property leased for investment purposes between spouses would previously have been exempt from stamp duty. However, since 1 July 2017, the same transfer would now attract stamp duty payable on the market value of the property.
Under the new system, a transfer between spouses/domestic partners will only be exempt from stamp duty if:
- the parties to the transfer are spouses or domestic partners;
- the property is residential property (for example – the property cannot be commercial or industrial property); and
- at least one of the parties receiving the stamp duty exemption (i.e. one of the transferees) occupies the property as their principal place of residence for a continuous period of at least 12 months commencing within the 12 month period immediately after the transfer; and
- there is no consideration for the transfer.
Any person contemplating transferring property between or to their spouse or domestic partner should consider whether such a transfer will attract a stamp duty liability. If you have any questions or need advice, feel free to make an appointment with one of our experienced Property Lawyers.