As of 1 January 2007, buyers of vacant land on which their first home is to be built are entitled to similar stamp duty concessions to those available to buyers of first homes.  No stamp duty will be payable for land valued below $150,000. For land valued between $150,000 and $300,000, concessional rates of stamp duty will apply. The concession will be conditional upon the home being built and the owner commencing occupation within 2 years after acquiring the land. 

Further concessions are also available for buyers of established first homes. No duty is payable if the value of the first home is below $320,000 - this is an increase from the previous $250,000 limit.

The laws relating to concessions and exemptions for those purchasing residential property are many and varied. Here, MacDonnells' Property experts provide a brief overview of the more common concessions and exemptions, and the occupancy requirements for purchasers.

First Home Owner Grant

Take up occupation:

• If you have purchased an existing home then you must take up occupation of the home within 12 months after the title has been registered in your name
• If you have entered into a contract to build a home or you are an owner builder, then you must take up occupation of the home within 12 months of the home passing final council inspection

Minimum period of occupation:

• If you have entered into an eligible transaction prior to 1 January 2004, there is no minimum period that you are required to live in the property to maintain your grant eligibility. However, the onus is on the applicant to prove that they have lived in the property as their principal place of residence, if requested by the Office of State Revenue.
• If you have entered into an eligible transaction on or after 1 January 2004, you must remain in continuous occupation for a period of at least six months.

Home or First Home - Transfer Duty Concessions

Where transfer duty has been assessed on the basis of a home or first home concession and the transferee takes up occupation of the residential land within 1 year from the transfer date but transfers, leases or otherwise grants exclusive possession of part or all of the land within one year from the occupation date to another party, Section 153 of the Duties Act provides for the partial removal of the Home or First Home Tranfer Duty Concession.

The proportion of the concession removed reflects the extent to which the transferee failed to retain ownership or exclusive possession of all or part of the residence for the required 1 year period.

Capital Gains Tax

The following factors are taken into account by the Taxation Office in determining whether or not a residence qualifies for Capital Gains Tax (CGT) exemption as a sole or principal place of residence:

• the length of time the person has lived in the residence;
• the address to which a person's mail is sent;
• the place of residence of a person's family;
• whether or not a person's belongings are kept at the residence;
• the person's address on the electoral roll;
• the person's intention in occupying the residence; and
• the connection of services and utilities such as telephone, electricity and gas.

It should be noted that the mere intention to occupy a dwelling as a sole or principal place of residence without actually residing in the dwelling will not be sufficient to procure the exemption. Although there is no fixed length of time that the purchaser is required to live in the property, 3 months is the generally accepted time frame.
 
Residence Acquired or Built for Profit-Making Purposes
It is important to note that the sole or principal place of residence exemption only applies for CGT purposes. A person who for instance regularly buys houses, undertakes renovations and then re-sells the property for a profit, may be assessable on any gain under the normal income provisions of the income tax legislation, notwithstanding that the person resided in the houses whilst undertaking this work. This is because the residence was acquired or built for profit-making purposes, rather than for private or domestic reasons.

Land Tax

When a resident land owner (an individual) uses the land as his/her principal place of residence (PPR), he/she may be eligible for a PPR exemption/deduction on the amount of land tax payable.

Generally, land is not used as a PPR unless the owner has used that land, and no other land, for residential purposes continuously for the 6-month period preceding the liability date.

A full or partial exemption/deduction may be allowed where land is used as a PPR and for another purpose.

More information, please contact one of our Property experts:-

Brisbane | 3031 9700
Cairns | 4030 0576
Townsville | 4722 0220