24 June 2019
Stamp duty discount schemes established by State and Territory Governments are best suited to seniors who are moving to more affordable regional areas, an analysis by Downsizing.com.au has found.
Given all States and Territories have handed down their 2019/20 Budgets, Downsizing.com.au has undertaken a scan of stamp duty concession schemes available across the nation.
The analysis shows that only Victoria, the Australian Capital Territory, Northern Territory and Tasmania offer stamp duty discounts for seniors and pensioners.
The analysis also shows that the price threshold of these schemes generally aligns with property prices in the relevant regional area of that State, rather than the capital city.
This makes these schemes most attractive to people who are selling up in the city, and moving to rural or regional areas.
Victoria
Victoria arguably has the most lucrative stamp duty discount in Australia.
It allows eligible pensioners to get a full exemption from stamp duty for homes valued up to $330,000, with a duty discount available for homes valued from $330,001 to $750,000.
By paying no stamp duty on homes valued up to $330,000, the purchaser will save $12,870.
However, the low $330,000 threshold is unlikely to buy you much in Melbourne, where the median price of established standalone houses is $655,000 (according to Australian Bureau of Statistics figures for March 2019). The median price of attached dwellings, including in unit blocks, is $502,000.
However, the stamp duty concession scheme would be more likely to get you something in regional Victoria, where the median house price is $361,000 and median attached dwelling price is $285,000.
The incentive can only be used once and, if a home is purchased, it must be used as the family home. There is no requirement for the newly-purchased property to be smaller or less expensive than a previous home.
This program is expected to cost the government $91m in 2019-20, and increase to $109m in 2022-23, despite the fact Victoria has not changed the price threshold for its scheme for many years.
Australian Capital Territory
In its 2019/20 Budget handed down in May, the ACT Government extended its pensioner stamp duty concession scheme to June 2020, although at the same time it quietly and somewhat disappointingly reduced the scheme’s price threshold by nearly 40 per cent.
The government’s scheme is designed to “assist eligible pensioners to move to accommodation that is better suited to their needs by reducing the duty payable on their new purchase of a residential home or residential vacant land.”
From 1 July 2019, eligible pensioners in the ACT will pay no stamp duty for home purchases up to $420,000, representing a saving of $9,200, and receive a stamp duty discount for purchases up to $530,000.
This compares to the scheme in place up until 1 July 2019, where the stamp duty free threshold was $680,000, representing a saving of $20,300, and the discount was up to $895,000.
By doing this, the government’s annual expenditure on the scheme will be slashed from $1.7m to $700,000.
According to a government spokesperson, property value thresholds were adjusted to “better target the scheme to those most in need of assistance.”
However, the changes now make the scheme relatively unattractive for people looking to buy a house, given that Canberra in March 2019 had a median established standalone house price of $690,000. The scheme however could be more easily used by buyers of attached dwellings, given these dwellings have a median price of $438,500.
It is a shame the scheme is being scaled back, given that Canberra was only just starting to come into its own as a downsizing destination with the construction of the light rail and many new apartments.
Tasmania
As part of its 2019-20 budget handed down on 23 May, the Tasmanian Government announced it will be spending a further $1.2 million on its pension downsizing incentive in 2019-20.
The incentive was due to finish on 30 June, 2019, but now will be extended to 30 June, 2020.
Through the incentive, pensioners have the opportunity to claim a 50 per cent stamp duty discount worth up to $7,000 if they sell their family home in Tasmania and downsize into another property in the State with a lesser value worth under $400,000.
The $400,000 threshold is outside the range of Hobart’s median house price of $465,000, but better suited for regional areas (such as Launceston photographed above) where the median house price is $310,000. It could also be used to buy attached dwellings, which have a median price of $386,000 in Hobart and $247,000 in the rest of the State.
The family home will need to have been sold by 30 June, 2020, and the new home purchased within six months of this, for the incentive to be claimed.
There are a number of other terms and conditions, so it is well worth checking out the detail.
Northern Territory
In its 2019/20 budget, the Northern Territory has decided to expand its seniors stamp duty concession scheme until at least November 2020.
This scheme gives a flat $10,000 stamp duty discount for eligible seniors or pensioners, who purchase homes up to $750,000.
This means that you pay no stamp duty for purchases for up to $292,000.
This low threshold is well outside the median house price of Darwin ($472,000) but a little closer to the median house price in other parts of the Territory ($399,000). It is however close to the median attached dwelling price in Darwin ($300,000) and in the rest of the Territory ($362,000).
Conclusion
Every penny counts when you’re downsizing, so it is well worth checking out the above options.
The above information is at a reasonably high level, so looking more closely at the relevant government-supplied details is a must before making your downsizing move.
By Mark Skelsey, News Editor of Downsizing.com.au. Email Mark at news@downsizing.com.au
