A common misconception about purchasing property is that the buyer will only be paying the contract purchase price. What they have failed to take into account is that other authorities charge taxes and fees to record the purchase of the property and registering the change of ownership.
One such payment is the payment to the Queensland Revenue Office for payment of transfer duty. Transfer duty (formerly known as stamp duty) is a tax on the property being purchased which is charged by the Queensland Revenue Office.
As payment of transfer duty can be quite significant, the Queensland Revenue Office allows buyers to claim a concession to reduce the amount payable to them based off how the buyer is using the property. Transfer duty is calculated on these different bases:
- The property will be your first home;
- The property will be your home; or
- The property will be an investment property.
The property will be your first home
The Queensland Revenue Office waives the transfer duty payable if you meet the following criteria:
- The property is valued at less than $500,000.00, and you are paying market value for it;
- You are a person of at least 18 years of age;
- You have never held an interest in a residential property anywhere in the world;
- You have never claimed the first home vacant land concession;
- You will move into the property and live in it (with your personal belongings) within 1 year of the transfer date (usually the settlement date of the contract) and continue to live in it for a continuous basis of at least 12 months; and
- You will not sell, transfer, lease or grant exclusive possession on all or part of your property before you move in.
If the above criteria is met, you are eligible for a first home concession and the transfer duty will be calculated as $0.00. If you are claiming a first home concession, you must complete the Form QRO D2.1, select first home concession and lodge it with the Queensland Revenue Office. The form must be signed by the buyer and the buyer’s signature must be witnessed by an adult witness (that is anyone over the age of 18 who is not related to the buyer).
If you are buying your first home, intending to live in it and the value of the property is over $550,000.00, you cannot claim the first home concession and will need to claim the home concession listed below. For properties where the purchase price is between $500,000.00 and $550,000.00 transfer duty is still payable but it is calculated at the first home transfer duty concession rates.
The property will be your home
The Queensland Revenue Office reduces the transfer duty payable if you meet the following criteria:
- You are a person of at least 18 years of age;
- You are not acting as a trustee (that is acting on behalf of a trust);
- You will move into the property and live in it (with your personal belongings) within 1 year of the transfer date (usually the settlement date of the contract) and continue to live in it for a continuous basis of at least 12 months; and
- You will not sell, transfer, lease or grant exclusive possession on all or part of your property before you move in.
If the above criteria are met, you are eligible for a home concession and you will pay a lower rate of duty than if you were buying the property as an investment. If you are claiming a home concession, you must complete the Form QRO D2.1, select home concession and lodge it with the Queensland Revenue Office. The form must be signed by the buyer and the buyer’s signature must be witnessed by an adult witness (that is anyone over the age of 18 and is not related to the buyer).
The property will be an investment property
The Queensland Revenue Office will charge normal transfer duty if:
- You are purchasing the property through a Trust or company;
- You are purchasing the property as an investment property.
As you are not eligible for a concession the full amount of transfer duty will be payable to the Queensland Revenue Office. A Form QRO D2.2 must be completed by either the buyer or their legal or accounting representative. The transfer duty transaction must be lodged with the Queensland Revenue Office.
Foreign buyer additional payments
If the buyer is:
- A foreign individual meaning not an Australian citizen or permanent resident;
- A foreign corporation meaning less than 50% of shareholders of the voting powers are held with a foreign individual; or
- A foreign trust,
Then the buyer has to pay an additional amount to the Queensland Revenue Office called additional foreign acquirers duty on top of the amount already payable for transfer duty.
When is transfer duty payable?
Transfer duty is payable to the Queensland Revenue Office on the earlier of:
- 30 days of the contract becoming unconditional (that is all essential conditions of the contract have been satisfied); or
- The settlement date.
Failure to pay transfer duty on time may result in unpaid tax interest, which is calculated on a daily basis until payment of the transfer duty is made.
What if there are 2 buyers and they are eligible for different concessions
It is not uncommon to have 2 buyers but each buyer is eligible for a different concession (1 buyer may live in the property while the other buyer is buying it as an investment property). Fortunately, transfer duty is calculated on the buyer’s interest in the property and the different concessions will apply on the buyer’s eligibility (in the above scenario home concession and no concession will be claimed on the buyer’s interest in the property).
If you have any questions or require assistance with transfer duty and your conveyancing matter in Queensland, please contact the property team at NB Lawyers for more information.
