14 June 2011 saw Treasurer, Andrew Fraser table the 2011-2012 Queensland State Budget in Parliament.  

One of the key issues contained in the State Budget are the proposed changes to transfer duty rates, including the removal of a concessional transfer duty rates for homeowners.

It is proposed that the transfer duty reforms will be complemented by the introduction of a new buildingboost $10,000 grant for the acquisition of newly constructed premises, coupled with the continuation of the $7,000 first home owners grant. However, such reforms to transfer duty are likely to leave many nonfirst home buyers up in arms.

What are the current rates of transfer duty for the home concession?

Currently, duty is calculated as follows:

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What are the current rates of transfer duty?

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What are the proposed rates of transfer duty?  

From 1 August 2011 the following rates of transfer duty are set to apply:

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How does this impact on the average home owner?

The proposed amendment to the home concession is set to almost double the cost of transfer duty paid by a owner-occupier on the acquisition of an average main residence. For example, under the current concessional transfer duty rates, the cost of transfer duty on an acquisition of a property valued at $500,000 is $8,750. However, the proposed amendments and the removal of the concessional rates will see the cost of duty payable on such an acquisition almost double to $15,525.  

The changes to the banding for duty rates means that from 1 August 2011, duty will be lower than what it would otherwise be. For example, without the home concession, a $300,000 home acquisition would give rise to a duty liability of $8,925. However, with the new banding from 1 August 2011, the duty will be lower at $8,325. The accords with the stated intention of the Queensland Government to “ensure transfer duty payable on a home remains lower in Queensland than under the standard rate in any other mainland state of Australia”.  

Please note that the new duty regime for homes still has the “first-home owner concession”. This is a duty concession and independent of the First-Home Owners Grant and Queensland Building Boost Grant.

What can you do – home concession?

The proposed changes are to take effect from 1 August 2011. However, as the amendments have only recently been tabled in parliament, guidance has not yet been provided on how the changes will be implemented. For example, it is uncertain whether the home concession will be available on a contract entered into prior to 1 August 2011 but settled after 1 August 2011.

Although it is likely that such uncertainties will be addressed in the amendments to the Duties Act 2001 (Qld) that will be implemented to give effect to the removal of the concession, potential purchasers of main residences should still err on the side of caution.

It is advisable that any clients in the process of purchasing a main residence finalise the purchase (and pay transfer duty) prior to 1 August 2011 in order to take advantage of the current home concession.

Transfer duty on other transactions?

The proposed amendments to the bands of transfer duty is also likely to impact upon other dutiable transactions, such as the sale of businesses or unit trust transactions etc.  

Accordingly, consideration should be given to postponing some dutiable transactions to after 1 August 2011. This may ensure that the slightly more beneficial levels of transfer duty are imposed on transactions valued less than $540,000. For transactions greater than $540,000 the level of duty remains the same so the timing for these need not change for duty reasons.