Stamp duty discount schemes established by State and Territory Governments are best suited to seniors who are moving to more affordable regional areas, an analysis by Downsizing.com.au has found.
Downsizing.com.au has undertaken a scan of stamp duty concession schemes available across the nation. A number of States have recently expanded their schemes to stimulate home construction and activity in the wake of the COVID-19 economic shutdowns.
These schemes can be used by downsizers when moving into general apartments, villas and homes.
The analysis shows that Victoria, the Australian Capital Territory, Northern Territory, Western Australia and Tasmania offer stamp duty discounts for seniors and pensioners.
The analysis also shows that the price threshold of these schemes generally aligns with property prices in the relevant regional area of that State, rather than the capital city.
This makes these schemes most attractive to people who are selling up in the city, and moving to rural or regional areas.
Victoria arguably has the most lucrative stamp duty discounts in Australia - but arguably also the most complicated.
By paying no stamp duty on homes valued up to $330,000, the purchaser will save $12,870.
However, the low $330,000 threshold is unlikely to buy you much in Melbourne, where the median price of established standalone houses in March 2021 was $859,097, according to CoreLogic. The median price of units in the same month was $593,121.
However, the stamp duty concession scheme would be more likely to get you something in regional Victoria, where the median house price in March 2021 was $470,508 and median unit price $389,981.
The incentive can only be used once and, if a home is purchased, it must be used as the family home. There is no requirement for the newly-purchased property to be smaller or less expensive than a previous home.
This program is expected to cost the government $80m in 2021-22, and increase to $86m in 2022-23, despite the fact Victoria has not changed the price threshold for its scheme for many years.
In addition, in May 2021, the Victorian Government announced a new concession for people buying inner-Melbourne apartments, which could benefits downsizers moving into this area.
From 21 May 2021, people buying new apartments in the Melbourne City Council area worth up to $1 million will not pay stamp duty, if the property has been completed for at least 12 months and has not sold. This represents a stamp duty saving of $55,000.
If the apartment has been unsold for less than 12 months, a 50 per cent stamp duty cut will apply from 1 July 2021.
The concession scheme expires on 30 June 2022, and is expected to cost the government $33.2 million in 2021-22.
Outside of the Melbourne City Council area, off-the-plan apartment buyers - who are going to use their apartment as their home - do have the potential to claim a small discount on their stamp duty. The government has increased the threshold to access this discount to $1 million from 1 July 2021.
Australian Capital Territory
The Australian Capital Territory has stamp duty concession schemes which benefit pensioners and downsizers buying off-the-plan apartments.
Under a scheme which came in place from 1 July 2021, and expanded on 1 April 2022, there is no stamp duty on off-the-plan apartment and townhouse purchases valued at $600,000 or less, saving downsizers some $15,720.
To be eligible for the scheme, at least one buyer must live in the home continuously for at least one year, starting within 12 months of the date of completion (settlement date) of the off the plan agreement
What's more, from 1 July 2021, the ACT Government increased the threshold of its pensioner stamp duty concession scheme.
The government’s scheme is designed to “assist eligible pensioners to move to accommodation that is better suited to their needs by reducing the duty payable on their new purchase of a residential home or residential vacant land.”
The threshold for pensioners to avoid paying any stamp duty increased from $450,000 to $490,000. This means that a pensioner buying a home valued at $490,000 will save $11,060 in duty.
Also from 1 July 2021, pensioners received a discount on their stamp duty payment for properties valued up to $642,000, up from $570,000 in 2020-21.
There are separate threshold increases for vacant land purchases.
Tasmania offers a stamp duty discount for eligible downsizing pensioners.
Through the incentive, pensioners have the opportunity to claim a 50 per cent stamp duty discount worth up to $11,250 if they sell their family home in Tasmania and downsize into another existing home in the State with a lesser value worth up to $600,000.
The downsizer must live in the new home for at least six months.
In March 2022, the Tasmanian Government announced an extension of its downsizing stamp duty concession to 30 June 2023.
There are a number of other terms and conditions, so it is well worth checking out the detail.
FIND OUT MORE: Why retiring to Tasmania is a great move for downsizers
Sadly, the Northern Territory - from 30 June - has decided to discontinue its seniors stamp duty concession scheme until at least 30 June 2021.
This scheme had given a flat $10,000 stamp duty discount for eligible seniors or pensioners, who purchase homes up to $750,000 (this meant you paid no stamp duty on purchase up to $292,000).
The government has not explained why it canned the scheme.
In Western Australia, you are able to claim a stamp duty rebate for off-the-plan apartment purchases, where construction on the apartment project has not commenced.
Up until 23 October 2021, you were able to get a 75 per cent rebate off the expected stamp duty cost, up to a $50,000 cap.
From 24 October 2021 and to 24 October 2023, it will be possible to claim up to 50 per cent of the expected stamp duty cost, again up to a $50,000 cap.
There is no cap on the purchase price or value of the unit or apartment, and the scheme can be accessed by people who already own property (ie: non-first home buyers). This makes the scheme suitable to be used by downsizers seeking to move into a new apartment.
Sadly, other States offer no or minimal stamp cuty discounts for pensioners or downsizers.
Queensland, for instance, offers an across-the-board stamp duty discount for people buying homes they will be living in.
NSW does allow people purchasing off-the-plan apartments to defer stamp duty and is separately consider a reform which will allow downsizers to avoid stamp duty and instead paying an annual land tax.
Every penny counts when you’re downsizing, so it is well worth checking out the above options.
The above information is at a reasonably high level, so looking more closely at the relevant government-supplied details is a must before making your downsizing move.
It also important to note that, for many types of retirement and downsizing property, you don't need to pay any stamp duty at all - see this story to find out more.