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Stamp duty on breakdown of relationship
23 Nov 2021

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.

Liability limited by a scheme approved under Professional Standards Legislation.

Last updated: 23 November 2021 Article by: Halil Gokler

 

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Celal has been a great supporting presence during our first home purchase. My partner and I had used Haitch Legal for... contract reviews and conveyancing needs during settlement of our home purchase. Despite having a million questions Celal was always happy to answer them and guided us through the process. Everything was made simple for us to understand which gave us the right confidence to successfully purchase and settle our first home!read more
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Halil is a long time colleague of mine and I can testify to his professionalism and quality service. He is a smooth... operator who takes the guesswork out of your purchase or sale of property.read more
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03:24 10 May 20
I have engaged Haitch Conveyancing based on their 5 star reviews and their quick response and transparent... pricing.Celal and Halil reviewed couple of contracts for me and always pointed out important matters and provided change feedback in timely and consistent manner. When I found the one, Celal has reviewed the contract very promptly and kept me updated with all the progress during settlement period. Everything was calculated correctly and he ensured all involved parties and agencies are also informed. I cant thank enough to Celal and Halil for their service and making this home buying process as easy as.I strongly recommend Haitch Conveyancing to anyone in Victoria, Australia for all property matters.read more
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I utilised Haitch Conveyancing for my first property purchase and they were nothing short of brilliant. They were... thorough, prompt, always had time for me, and explained things in ways I easily understood. The whole team were amazing. I'd recommend them to anyone looking for conveyancing services in Melbourne, I wouldn't go with anyone else.read more
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20:10 10 Mar 20
Halil and team were nothing short of amazing! Answering queries within hours and having everything settled on time and... without hiccup.Will be using Haitch for all future settlements. Thanks again.read more
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We knew very little about conveyancing process but Halil explained the process in detail to us and made the process... painless. Katarina was excellent with communication keeping us up to date as it progressed.Would highly recommend Haitch Conveyancing.read more
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Haitch Conveyancing has provided legal services for us for a property settlement in Melbourne. Their service was very... personalized, on - time and flawless. I was able to reach them whenever i had questions and each time they took their time to explain all the relevant details to me. I would never work with any other law office for conveyancing ever again. I recommend Haitch to every Victorian.read more
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The team was fantastic, easy to deal with, everything was done electronically and via email. Can call at any time and... receive an answer to your questions.read more
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The Team at Haitch Conveyancing took care of conveyancing in a friendly and efficient manner.
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Efficient team. They made our conveyancing process very easy
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Haitch Legal did an excellent job taking care of our property purchase settlement. They made the whole process seem... seamless. Halil and Katarina were always patient and accessible and willing to answer any question I had. Very reasonably priced too. Will use again.read more
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Halil & Katarina are approachable with queries. We use them for all our business dealings. Would highly recommend to... all !!!read more
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Halil and Katerina were brilliant. Very responsive and patient with all our questions. Highly recommend.
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Excellent service with very cordial staff . Thank you for your support and assistance.
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