Home and First Home Concession

A recent court case changed the stamp duty concessions for owner occupiers. You may be aware that if you are going to live in the property you are buying you will receive a discount on the amount of stamp duty you pay. It is approximately $7,000 for owner occupiers and for first home owners you don’t pay any stamp duty if the price is under $500,000. If it is over $500,000 you typically only receive the same discount as owner occupiers.

One of the most annoying aspects for real estate agents has been the fact that if there is an existing tenant in the property the buyer may miss out on their concession. The Stamp Duties Office (Office of State Revenue, Commissioner of State Revenue or OSR) have had a rule which says if the owner stays on or there is an existing tenant they must move out within 6 months of settlement. This is notwithstanding that the law says the buyer only has to move in within 12 months to claim the concession.
This rule was overturned by the court of appeal in the decision of Commissioner of State Revenue v Di Sipio & Anor [2015] QCA. The court decided that if the tenancy agreement was entered into between the seller and the tenant then the buyer can let them stay in the premises up to the 12 months. The buyer simply had to move in within the 12 months from settlement. Please note the 6 month rule still applies if the buyer lets the seller stay in the premises after settlement.
The reason this rule existed is that the legislation says if you rent out the premises before you move in then you lose the concession. So you must never rent the premises before you have lived there for 12 months including part of the premises. You are allowed to let an existing tenant remain in the premises up to 12 months.

The law is fairly complex, so I have put together some examples of how it works in practice.

  1. Existing tenant where the lease expires 10 months after settlement. Can still claim the principle place of residence concession.
  2. Agreement is reached with the owner before settlement to stay on after settlement. Can claim the concession providing the seller vacates within 6 months and the period is not extended at any stage after the settlement date even if it is still within the 6 month period.
  3. Existing tenant where tenancy expires 4 months after settlement but continues in occupation under a periodic tenancy for a further 6 months. Can claim the concession.
  4. Existing tenant who reaches an agreement with the buyer after settlement to extend the tenancy from 4 months to 5 months. The concession is lost. Grist v Commissioner of State Revenue (2014) QCAT 259.
  5. The buyer enters into a tenancy agreement before settlement. The concession is lost unless the tenant had possession of the property before settlement and vacates within 6 months of settlement.
  6. The seller enters into a tenancy agreement with a tenant (with the consent of the buyer) prior to settlement. Can claim the concession providing the buyer takes possession within 12 months.
This is not unusual for off the plan situations where a final certificate is issued a number of months before settlement allowing the developer to rent some of the units before settlement.
For further information please contact Roland Taylor on 0417 605 185 or [email protected]