Pensioner and concession cardholder duty reduction (contracts from 1 July 2023)
Duty exemption or concession eligibility for contracts from 1 July 2023.
This information is for contracts signed on or after 1 July 2023. Different rules apply to contracts signed before 1 July 2023.
Key information
If you are an eligible concession cardholder, including a pensioner, you may be entitled to a one-off reduction in land transfer duty when you buy a home.
For contracts entered into from 1 July 2023:
- an exemption from duty applies if the property value is $600,000 or less
- a concession from duty applies if the property value is from $600,001 to $750,000.
The thresholds apply to the total value of the home, even if you only buy a share.
You can only receive this reduction once. If you are buying your first home, you must choose between the pensioner duty reduction and the first home buyer duty benefits. Whichever you choose, you may still be eligible for the First Home Owner Grant.
Eligibility
You are eligible for the reduction if you:
- hold one of the approved concession cards at the date of the transfer (settlement)
- buy the property for market value
- intend to live in the home as your principal place of residence.
The home can be:
- an established home
- a home bought off the plan, such as a house and land package where the person who sells you the land also builds the home as part of the agreed price
- a home that is built within 3 years of you acquiring vacant land.
You cannot receive the reduction if you received a pensioner duty exemption or concession for an earlier transaction. In a joint purchase, anyone who receives the benefit is treated as having used their one entitlement. This applies even if you were not a cardholder at the time of the earlier transaction.
Residence requirement
The property must be used as a principal place of residence by the pensioner or concession cardholder.
If more than one pensioner or concession cardholder buys the property, only one of them needs to meet this requirement (provided that person buys an ownership interest of 25% or more in the property).
Different residence rules apply, depending on the home you buy:
- An established home or a home bought off the plan – you must move into the property within 12 months of settlement and live there for 12 consecutive months as your principal place of residence.
- Vacant land – you must build a home on the land and live in it as your principal place of residence for 12 consecutive months commencing from whichever of these dates occurs first:
- 12 months of the date you can lawfully live in the property, which is usually the date the occupancy certificate is issued, or
- 36 months of the settlement date.
If your circumstances change and you may not meet the residence requirement, you must notify us in writing within 30 days of the change in circumstances.
In limited circumstances, we may vary the residence requirement.
If you do not meet the residence requirement, we will reassess the transfer without the reduction.
Calculating the duty reduction
Generally, a full exemption from duty applies for homes valued up to $600,000 and a concession applies for homes valued from $600,001 to $750,000.
The exemption or concession is based on the dutiable value of the property. This is generally the greater of the price paid for the property or its market value, except when the off-the-plan concession applies.
Example 1
Kate is an eligible pensioner. She buys her home for $580,000. Kate is entitled to the exemption and no duty is paid on the transfer of the property.
Example 2
Sophia is an eligible pensioner. She buys her home for $700,000. Concessional duty applies because the dutiable value of the property is more than $600,000 but not more than $750,000.
Building on vacant land
For vacant land where you are building a principal place of residence, the exemption or concession is based on the dutiable value of the vacant land only. The cost of the building works is not included.
Off-the-plan homes
For off-the-plan homes, different rules apply to align the reduction with the principal place of residence concession.
The reduction for an off-the-plan property is based on:
- the contract price for your property, or
- the dutiable value of your property which must be $550,000 or less, including the off-the-plan concession.
Your vendor will give you the information you need to determine the off-the-plan value of your property for duty purposes.
Examples of how the reduction applies to purchases made off the plan
Example 3
Sam is an eligible cardholder who buys an apartment off the plan as a future home for $800,000. Sam signs the contract before any construction has started. The vendor advises Sam that $300,000 of the contract price will be spent on constructing her apartment.
This means that the off-the-plan value of Sam’s apartment is $500,000 ($800,000 – $300,000).
This is less than the $550,000 threshold for the principal place of residence concession. The reduction thresholds are assessed against the off-the-plan (dutiable) value of Sam’s apartment ($500,000).
Accordingly, Sam is entitled to an exemption.
Example 4
Sam is an eligible cardholder who buys an apartment off the plan as a future home for $800,000. Sam signs the contract before any construction has started. The vendor advises Sam that $150,000 of the contract price will be spent on constructing her apartment.
The off-the-plan value of Sam’s apartment is $650,000 ($800,000 – $150,000).
This is above the $550,000 threshold for the principal place of residence concession so the off-the-plan concession cannot apply.
This means the dutiable value is the contract price of $800,000. As this is above the $750,000 threshold for the reduction, Sam is not entitled to an exemption or concession.
Buying a share in a property
If you are an eligible pensioner or concession cardholder and you buy a share in a property, the thresholds apply to the total value of the property, not the value of your share.
At least one pensioner or concession cardholder must own 25% or more of the property.
Duty is assessed on the total dutiable value of the transfer, not just your share, and all the purchasers are liable for the duty.
How the reduction applies when you buy a share in a property
Example 5
Christos and Molly are both eligible cardholders. They buy their home together for a total price of $590,000.
They each own 50% of the property.
No duty is paid on the transfer of the property.
Christos or Molly must live in the property for at least 12 consecutive months within 12 months of settlement.
Example 6
Dan and James are both eligible cardholders. They buy their home together for a total price of $720,000. Dan owns 20% and James owns 80%.
Dan’s share of the property is less than 25%, but James’ share is 25% or more.
Concessional duty applies because the dutiable value of the property is more than $600,000 but no more than $750,000. Both Dan and James are liable for the duty.
James must live in the property for at least 12 consecutive months within 12 months of settlement.
If James was not an eligible cardholder, the exemption or concession would not apply as there is no eligible cardholder buying 25% or more of the property.
Example 7
Avi is an eligible cardholder who buys a home with Elizabeth, who is not an eligible cardholder. They each have a 50% interest in the property. The purchase price is $590,000.
No duty is paid on the transfer of the property.
In either case, Avi must live in the property for at least 12 consecutive months within 12 months of settlement.
If Avi’s interest in the property was less than 25%, neither the pensioner exemption nor concession would apply.
Related party transfers
The exemption or concession is only available to genuine purchasers who paid at least the market price for their home.
This ensures that duty relief does not benefit those who purchase their home at a discounted price or receive it as a gift.
For all sales between related or associated parties, you must provide additional evidence that you paid at least the market price for your home. This includes:
- proof of payment of the purchase price (e.g. bank statements, loan agreements and receipts)
- evidence of the market value of the property, such as a:
- letter of appraisal from a licensed real estate agent that is no more than 6 months old, or
- valuation by a certified practising valuer who is a member of the Australian Property Institute or the Real Estate Institute of Victoria with sworn valuer accreditation that is no more than 12 months old.