Stamp duty on breakdown of relationship
Separation can be an extremely emotional time, it can be difficult to think about all the small details involved when transferring property from former partners. At Haitch Legal, we have extensive experience in property law and and can assist you with all your property transactions.
When does the stamp duty exemption apply?
Any property transfer pursuant to a breakdown of marriage, de facto relationship or domestic relationship is exempt from stamp duty. The transfer can be from both parties to either on of the parties or from one party to the other.
Prior to finalising the transfer, it is advisable that you enter into Consent Orders or a Binding Financial Agreement (BFA) with your former partner. Either of these will document the separation and specify the property settlement. A family lawyer can assist in drafting the Consent Orders or BFA. You do not need to go to court to obtain a Binding Financial Agreement.
The exemption applies to both residential properties, commercial properties and investment properties.
What is the relevant Legislation?
Section 44(1) of the Duties Act 2000 (Vic) states that no duty is chargeable in respect of a transfer of dutiable property if it can be satisfied that:
(a) the transfer has been made solely because of the breakdown of marriage or domestic relationship; and
(b)(i) the transferor is a party (or both parties) to the marriage of domestic relationship; and
(c)(i) the transferee is a party (or both parties) to the marriage or domestic relationship; and
(d) no other person takes or is entitled to take an interest in the property under the transfer.
What evidence does the State Revenue Office (SRO) require to finalise the transfer?
The State Revenue Office (SRO) requires an all in one Digital Duties Form to be completed by both parties with all their details.
As part of this form the parties will need to specify breakdown of relationship as an applicable stamp duty exemption or concession. here is also an additional requirement that there be no consideration on the transfer of land document for the stamp duty exemption to apply.
The Duties Online Form will need to be signed by all parties to the transaction and once stamp duty is verified there will be no requirement to pay stamp duty.
Example of the stamp duty exemption
Josh and Elizabeth are getting a divorce. Elizabeth has 2 investment properties in her name. Under the agreed court orders, Elizabeth has to transfer 1 of the properties to Josh. Because the transfer is occurring due to a breakdown of marriage, Josh and Elizabeth will be exempt from paying any stamp duty at settlement.
Does the stamp duty exemption apply to trusts or company transfers?
The stamp duty exemption is also available where there is a transfer to a trustee of a trust because of a breakdown of marriage or domestic relationship, the transferor was one of the spouses or domestic partners, and only the parties to the marriage or domestic relationship or their children were beneficiaries of the trust.
Section 44(1) of the Duties Act 2000 (Vic) states that no duty is chargeable in respect of a transfer of dutiable property if it can be satisfied that:
(a) the transfer has been made solely because of the breakdown of marriage or domestic relationship; and
(b)(ii) the transferor is a trustee of a trust of which a party (or both parties) to the marriage or domestic relationship is a beneficiary (or are beneficiaries); and any list of transferees as listed in Section 44(1)(c)
Subject to some restrictions, transfers from corporations can also qualify for an exemption where the transfer has been made solely as a result of breakdown of a marriage or domestic partners. The additional requirement that must be met is that the dutiable value of the property being transferred must not exceed the value of the interest of the parties to the marriage or domestic relationship in the corporation.
Section 44(3) of the Duties Act 2000 (Vic) states that no duty is chargeable in respect of a transfer of dutiable property if it can be satisfied that:
(a) the transfer has been made solely because of the breakdown of marriage or domestic relationship; and
(b) the transferor is a corporation; and
(c) the transferee is any of those contained within this subsection; and
(d)…
(e) the dutiable value of the transfer does not exceed the value of the interests of the parties to the marriage or domestic relationship in the corporation; and
(f) as a result of the transfer, the value of the interests of the parties to the marriage or domestic relationship in the corporation is reduced by the same amount as the dutiable value of the property transferred.
Contact us for further information
Contact our office on 8590 8370 for more information on all your legal matters including the stamp duty exemptions that apply to your situation. Our conveyancing Melbourne property lawyers can also assist in transferring property pursuant to your relationship breakdown so you don’t pay stamp duty.
This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.
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Last updated: 23 November 2021 Article by: Halil Gokler
