Making a decision to downsize your home should mean you have extra cash in your pocket.

That means it's always a good idea to try, where possible, to avoid stamp duty, a tax imposed by State government on the purchase or transfer of property. Depending on the price of the property, stamp duty can cost tens of thousands of dollars.

We’ve done the research to give you options to hold onto more of the money you receive when downsizing your home.

Buying into a retirement village

You’ve sold up and decided to buy into a retirement village.

Congratulations, because you will most likely avoid giving the government a hefty stamp duty fee.

Most retirement village dwellings are sold under a leasehold or ‘licence to occupy’ contractual arrangement.

Typically, the way the contracts are created for these tenure types means that stamp duty is not payable.

However, before you sign the contract on your new retirement village unit, make sure you ask questions about whether you could be up for stamp duty.

For instance, a retirement unit that has a strata, community or company title is likely to incur stamp duty, because it's regarded by government as freehold property.

That said, with only 12 per cent of retirement village units across Australia under a strata or freehold tenure, the odds of avoiding this tax are on your side.

This detailed piece by a NSW retirement village lawyer goes into further detail on the different retirement village contract types, and whether stamp duty applies.

Land lease communities

Here’s another stamp duty-free option to consider: moving into a land lease community – also known as over-55s lifestyle communities, manufactured home estates, residential parks or mobile home estates.

As you own the dwelling, but not the land underneath this dwelling, stamp duty doesn't apply and you won’t be giving the government a chunk of your hard-earned money. Land lease residents secure a long-term lease over the land on which their dwelling sits.

With the growing popularity of land lease living as a retirement accommodation, you should have plenty of choice of stamp duty-free homes.

Reducing stamp duty

Unfortunately, for other types of downsizer-friendly property, stamp duty is generally unavoidable.

This is particularly the case when moving into a general apartment, villa, townhouse or home - in these instances you own both the land and home on a freehold basis so you can't escape the tax man (or lady for that matter).

The good news is, however, is that has done the hard work for you and discovered the range of stamp duty discounts and incentives available for seniors available across Australia.

For example, currently, in the Australian Capital Territory, those who qualify for NDIS can get a stamp duty concession when buying a home with a value of $750,000 or less; while in NSW anyone who buys off the plan may be able to defer stamp duty for a year, as long as they intend to live in the property.

These schemes generally benefit seniors who move to more affordable regional areas, as the schemes tend to have quite low home price caps.

Other ways to save

You may have considered building your own retirement duplex where you can live in one side, and rent or sell the other.

A tip here is to purchase the land first, and then build the duplex.

That way you won’t have to pay stamp duty on the value of the house you build, only the land you buy.