Disposal and its effect on your concession
If you dispose (e.g. sell, rent) all or part of your property before—or too soon after—moving in, you might lose your home transfer (stamp) duty concession.
If you claimed a transfer (stamp) duty concession for homes and wish to keep the concession in full, you can’t dispose of part or all of the property before moving in or within 12 months of when you first occupy it. For transfer duty purposes, ‘dispose’ means lease, sell, transfer or otherwise grant another person exclusive possession to the property or part of it (e.g. rooms, granny flat).
If you dispose of your property after moving in, you will lose the benefit of the concession from that time, even if you continue to live in the property or move back in.
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It might just be a reminder about your home concession.
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If you received a specified foreign retiree exemption from additional foreign acquirer duty when you bought your property, you will also lose the benefit of that exemption if you dispose of the property (e.g. sell or rent 1 or more rooms) before occupying it, or within 1 year of occupying it.
Here are some common examples of when you could dispose without realising:
- You grant a lease extension to an existing tenant before moving in.
- You lease out a room or granny flat on the property within 12 months of moving in.
- You sell or transfer part of your interest in the property within 12 months of moving in.
- Within a few months of moving in, you lease out your home (or part of your home) using an online accommodation sharing platform (e.g. Airbnb, Booking.com, Stayz).
- An existing tenant continues to live in the home after their lease expires or for more than 6 months after settlement, whichever comes earlier.
- A previous owner does not move out within 6 months.
If you transfer an interest or share in your home to your spouse as a gift, your transaction may not be considered a disposal.
Demolishing a home
Although demolishing a home is not a form of disposal, you will lose a transfer duty concession if you knock down the existing home before living there as your principal place of residence. Even if you eventually live on the property after rebuilding, you will not be able to keep any concession that you have claimed.
Not meeting the concession eligibility obligations
If you have claimed the transfer duty concession (and the specified foreign retiree AFAD exemption, where applicable) but now don’t meet an eligibility requirement, you must notify us within 28 days by completing a notice for reassessment (Form D2.4). You can either:
- complete and submit the form online advising us in Part F of your change in circumstances or if you claimed the specified foreign retiree AFAD exemption
- or
- download the form to send by email or post. (Use this form if you are experiencing domestic or family violence.)
You might not lose the concession if you can’t occupy the home because of an intervening event, but you still need to notify us.
If we do a reassessment, you will have to pay back some transfer duty and additional foreign acquirer duty (where applicable). You may also have to pay unpaid tax interest and penalty tax, depending on your circumstances. This will be explained on your reassessment notice if you receive one.
The sooner you tell us you’re no longer meeting an eligibility requirement, the better your chances of paying lower interest and penalty amounts.
Losing some of the concession
If you claimed a home concession, first home concession or the specified foreign retiree AFAD exemption (where applicable), you must move in within 12 months.
If you claimed the first home vacant land concession or the specified foreign retiree AFAD exemption (where applicable), you have 2 years to build and move in.
If you moved in on time, but then sold, leased, gifted or otherwise disposed part or all of the property before the 12 months finishes, you may still be eligible for a partial transfer duty concession (i.e. you’ll only need to pay back a part of your transfer duty concession) or a partial AFAD exemption (where applicable).
Estimate what you might pay back
Follow these steps to estimate the amount of transfer duty you may have to pay back.
- Use our estimator to work out how much duty you would have paid if you didn’t get a concession.
- Work out the actual (concessional) amount of transfer duty you paid. This will be on your transaction documents in your settlement statement from your conveyancer. (You can use the estimator if you are unsure.)
- Subtract your step 2 amount from your step 1 amount to calculate the total discount you received.
- Divide your step 3 amount by 365 to work out your daily discounted amount.
- Work out the number of days from your disposal date to the 1-year anniversary of your moving in.
- Multiply your daily concession amount (step 4) by the number of days where you didn’t live in your property (step 5).
You purchase an apartment for $500,000 and claim a home concession. You move in on 1 April and transfer the property to Jenny on 21 December. Using your date of occupation as the start date, you work out that you sold your property 100 days short of meeting your 12-month obligation.
- Duty on $500,000 with no concession = $15,925
- Duty on $500,000 with a home concession = $8,750
- Amount saved due to receiving concession ($15,925 – $8,750) = $7,175
- Daily discounted amount ($7,175 ÷ 365 days) = $19.6575 per day
- Number of days short in meeting the 12-month obligation = 100 days (22 December to 31 March)
- Transfer duty to be paid back ($19.6575 × 100) = $1,965.75
After settlement, you move into your home and then lease it out a few weeks short of the 12-month obligation. You complete and submit a Form D2.4 within 28 days of granting the lease.
You will receive a partial concession on a pro-rata basis. You will have to pay duty on the number of days that you were short in meeting your obligations. We will work out what you need to repay. In this instance, no unpaid tax interest or penalty tax applies because you did the right thing and told us in time.
Your existing tenants move out after their lease expires and you start renovating. The renovations will take 15 months. You tell us as soon as you realise you won’t be able to move in within 12 months of settlement.
You will have to:
- repay the transfer duty concession in full
- pay unpaid tax interest because you received a benefit that you were not entitled to.
In this instance, however, no penalty tax applies because you notified us properly.
After settlement, you don’t move in to your property, but lease it out instead. You do not notify us and provide misleading information during our investigation.
You will have to repay the concession in full. You will also have to pay unpaid tax interest because you received a benefit that you were not entitled to. Penalty tax of up to 90% will also apply because you didn’t notify us of your breach, didn’t cooperate and tried to stop us from understanding your liability.
Also consider…
- Find out about the changes that affect land tax exemptions, such as selling your land.
- Learn the requirements to keep home concessions and the first home owner grant.