Question
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08 December 2017

'Tain't what you do, it's the way that you do it

Sale, Purchase, Mortgage, Lease
Federal

Asked

Purchase of residential property by Australian citizen and non-citizen - Stamp duty

Hi,

I act for the purchasers. My clients are a couple, one of whom holds Australian citizenship and the other does not (I hold no instructions as to whether they wish to run for parliament).

My clients wish to purchase a residential property with an existing house in New South Wales. They are concerned about stamp duty.

The Australian citizen has not previously purchased a residential property. Could you please advise me if the following two options are correct and appropriate:

1) The property is purchased in the Australian citizen's name thus attracting a stamp duty exemption. A deed is entered into between the couple regarding their future intentions when either the non citizen gains citizenship or the property is sold.

2) The property is purchased by both as tenants in common. An exemption is gained for the Australian citizen on their share and stamp duty is payable on the non citizen's share including the foreign resident surcharge calculated on the one half share of the value of the property.

Or is there a further option?

With thanks.

Answered

Thanks for the question.

The first home buyers assistance scheme in NSW enables first home buyers to receive duty concessions as long as at least one of them is a citizen or permanent resident and all of them have never owned residential land in Australia.

Therefore the property can be bought in one or both names from the point of view of accessing the duty concessions under the first home buyers assistance scheme.

However if both buy, surcharge duty of 8% is payable by the foreign person on their portion of the property. This is a costly option.

If the citizen buys in their own name and neither they nor their partner have owned residential land in Australia previously, they are entitled to the duty concessions. There is no impediment to the parties entering into a financial agreement.

If the non-citizen has previously owned residential land in Australia then the shared equity arrangements under the first home buyers assistance scheme may apply. The shared equity arrangements allow an eligible purchaser to buy property with an ineligible party and still receive a concession. The eligible purchaser's interest must be at least 50%. Duty is payable on the portion of the property purchased by the ineligible party and additionally surcharge duty on their portion of the property.

Regards

Mentor