In this video we explain Transfer Duty implications if you dispose of your owner occupier property too soon. This applies to QLD Property (Real Estate).
This blog/video is for you if you want to learn about what happens if your circumstances change and you "dispose" of your property within a concession period.
This means: lease, transfer, sublease, sell, airbnb or even grant someone else exclusive possession of your property!
This video is great for - QLD property owners, real estate agents & mortgage brokers who want to know more about QLD Transfer (stamp) Duty and how clients can end up in hot water...
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Hi everybody - George Sourris, Empire Legal.
Today's topic: Transfer Duty implications if you dispose of your owner occupier property too soon.
In Queensland, when you obtain a transfer duty concession for HOME or FIRST HOME, you undertake not to "dispose" of any part of the property for a 12 month period of time from when you move in. "Dispose" is defined as: lease, sell, transfer, or otherwise grant another person exclusive possession to the property, or part of it e.g. rooms, granny flat.
If you dispose of your property after moving in, you will lose the benefit of the concession from that time, even if you continue to live in the property or move back in.
If your circumstances change, you have an obligation to inform the Queensland Revenue Office (QRO) in a timely manner. Here are some common examples of when you could dispose without realising:
Demolishing a home.
Although demolishing a home is not a form of disposal, you will lose a transfer duty concession if you knock down the existing home before living there as your principal place of residence.
Even if you eventually live on the property after rebuilding, you will not be able to keep any concession that you have claimed. More information for demolishing a home and transfer duty can be found here.
Not meeting the concession eligibility obligations.
If you have claimed the transfer duty concession, but now don't meet an eligibility requirement, you must notify QRO within 28 days by completing a notice for reassessment form (D2.4).
You can either:
a) complete the form and submit it online; or
b) download the form and send it in the post.
You may not lose the concession if you cannot occupy the home because of an "intervening event" - i.e. natural disaster or death, but you still need to notify QRO.
If QRO do a reassessment, you'll have to pay back some of the transfer duty. You may also have to pay unpaid tax interests and penalty tax, depending on your circumstances.
This will be explained on your reassessment notice if you receive one. The sooner you tell QRO you're no longer meeting an eligibility requirement, the better your chances of paying lower interest and penalty amounts.
If you moved in on time but then sold, leased, gifted, or otherwise disposed of part of, or all of the property before the 12 month period finishes, you may still be eligible for a partial transfer duty concession i.e - you'll only need to pay back a part of your transfer duty concession, on a pro-rata basis.
If you've claimed the First Home Vacant Land concession, you have two years to build and move in. If you move in on time, but then sold, leased, gifted, or otherwise disposed within the 12 months, you may still be eligible for a partial transfer duty concession, but you'll need to pay back a part of the concession.
Example: penalty tax.
After settlement, you don't move into the property, but instead you lease it out. You don't notify QRO and you provide misleading information, which they find during an investigation. You will have to repay the concession in full. You'll also have to pay unpaid tax interest because you received a benefit that you were not entitled to. Penalty tax of up to 90% will also apply because you didn't notify QRO of your breach, didn't cooperate, and tried to stop QRO from understanding your liability.
There are more examples on the QRO website, including an estimator for what you will have to pay back.
So basically - you have to disclose if you dispose.
Also, if you've received a text message from QRO, it's likely just a reminder about your concession. If you've moved in and are meeting your obligations on the concession, you don't need to do anything. It's just an FYI. It is there to remind you if your circumstances change to notify them.
Special thanks to Clare Simpson for this blog suggestion.
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George Sourris. Empire Legal.
If you have any questions, you can email me: george@empirelegal.com.au.
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Thanks for reading everybody. See you on the next one.
Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Gold Coast, Queensland, Australia.
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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.