Transferring property to your spouse? Don’t overlook stamp duty

Transferring property between spouses or partners can be a practical step when considering relationship changes or financial planning. The good news is that in certain circumstances, you may be eligible to obtain a duty exemption on these types of transfers, potentially saving tens of thousands of dollars.

There are certain requirements however that must be met if you do not want to incur duty and understanding these requirements upfront can help you avoid costly mistakes.

What is a spousal transfer exemption?

In Victoria, a duty exemption may apply when property is transferred between spouses or domestic partners under section 43 of the Duties Act 2000. The State Revenue Office (SRO) designed this exemption to recognise that such transfers are often part of shared ownership arrangements, rather than commercial transactions.

SRO eligibility requirements

To qualify for this duty exemption, several conditions must be met including:

1. The transfer must be between eligible partners
   
   The duty exemption applies only if the transfer is between legally married spouses or domestic partners (including de facto couples) as a result of ‘love and affection’.
   
   
2. The property must be a residential property
   
   The SRO exemption is limited to residential property i.e. houses, apartments or units. Commercial or industrial properties such as office buildings or warehouses are not eligible.
   
   
3. The property must be your principal place of residence (PPR)
   
   If the property is being transferred into the name of one spouse or partner to hold in their sole name, then that spouse or partner must live in the property as their PPR for a continuous period of at least 12 months with this period commencing immediately commencing after the transfer.
   
   If the property is being transferred into the names of both spouses or partners, then at least one person must live in the property as their PPR for a continuous period of at least 12 months, with this period commencing immediately after the transfer.
   
   If the property is an investment property or holiday home, the section 43 exemption will not apply.
   
   
4. The transfer must take place for no consideration
   
   The exemption can only be obtained if no consideration is exchanged between partners. For instance, the SRO may determine consideration is present if spouses or partners complete a spouse transfer as part of a refinancing of a mortgage or to secure additional borrowings to improve the property. If the SRO decides consideration is present (even if this consideration is non-monetary in nature), duty will be charged on the transfer.  

Getting the transfer right

Compliance with SRO and legislative guidelines is crucial, including any period after the date of the transfer with such transactions regularly being audited by the SRO. Before proceeding with a spouse or partner transfer, we recommend seeking legal advice to confirm your eligibility and for peace of mind.

How we can help

Moores’ Residential Property team advises clients on property transfers, stamp duty exemptions and ownership arrangements. Our team can assist with assessing eligibility for duty exemptions, preparing transfer documentation and ensuring compliance with SRO requirements.

Contact us

Please contact us for more detailed and tailored help.

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^{Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.}