Do I pay stamp duty on property after divorce property settlement?
Updated: 6 October 2024 · Read time: 5 minutes
Stamp Duty in a property settlement after divorce or separation can in many cases by reduced or avoided.
When a marriage or de facto relationship ends, assets owned by the couple are usually divided and or sold off.
This raises the financial question, as to whether stamp duty will need to be paid, or factored in to the general property settlement.
What is “Stamp Duty”?
Stamp duty is a tax that is payable on various types of transactions, such as property transfers, motor vehicle registrations, and some business transactions.
In the context of property transfers, stamp duty is a tax that is payable by the buyer when purchasing a property.
The amount of stamp duty payable is based on the purchase price of the property and varies depending on the state or territory in which the property is located.
How Do You Obtain the Exemption on Stamp Duty?
In many cases, when property is transferred between spouses as part of a divorce settlement, stamp duty can be exempted or reduced.
The eligibility for stamp duty exemption varies from state to state in Australia, and the rules can be quite complex.
In general, to qualify for an exemption, the transfer must be made pursuant to a court order or a binding financial agreement.
The agreement must be properly drafted and executed by both parties, and it must comply with the requirements of the applicable legislation.
How Do You Include a Property Transfer in a Binding Financial Agreement?
A binding financial agreement is a legal document that sets out the financial arrangements between spouses in the event of a separation or divorce.
It can cover a wide range of issues, including property settlement, spousal maintenance, and the division of superannuation.
To include a property transfer in a binding financial agreement, the agreement must meet certain requirements, such as being signed by both parties and accompanied by a certificate from an independent legal practitioner.
Transferring the House Title After Separation
One of the most significant assets that spouses often need to divide after a separation is the family home.
To transfer the title of a house between spouses, the process will depend on whether the transfer is made pursuant to a court order (consent orders) or a binding financial agreement (BFA).
If the transfer is made pursuant to a court order, the parties will need to file the order with the relevant land titles office and pay any applicable stamp duty.
If the transfer is made pursuant to a binding financial agreement, the agreement will need to be drafted and executed by both parties, and the transfer will need to be lodged with the land titles office.
What are the Steps Needed to Obtain a Stamp Duty Exemption Between Spouses?
To obtain a stamp duty exemption between spouses, there are several steps that need to be followed.
- Firstly, the transfer of property must be pursuant to a court order or a binding financial agreement.
- Secondly, the relevant documentation must be prepared and executed by both parties.
- Thirdly, the transfer must be lodged with the land titles office, along with any necessary fees and documentation.
- Finally, the parties must apply for the stamp duty exemption, providing evidence of their eligibility.
Are There Other Stamp Duty Exemptions in Family Law?
In addition to stamp duty exemptions for property transfers between spouses, there are several other exemptions available in family law.
For example, there are exemptions available for the transfer of property between parents and their children, as well as between siblings.
There are also exemptions available for certain transfers that occur as a result of a court order or a binding financial agreement.
Are There Exemptions for Transfers of Property from Private Companies?
In some cases, transfers of property from a private company to a shareholder or related party may be subject to stamp duty. However, some states in Australia provide exemptions for certain transfers of property between private companies and their shareholders or related parties.
For example, in New South Wales, an exemption may apply to transfers of property between a private company and a related party if the transfer is part of a genuine internal corporate restructure. This exemption can help companies save on stamp duty costs when transferring assets between related entities.
It's important to note that the specific requirements for these exemptions may vary depending on the state or territory in which the transfer takes place.
As such, it's important to consult with a legal or financial professional who is familiar with the relevant laws and regulations.
Overall, if you are involved in a transfer of property from a private company, it's essential to seek advice to ensure that you are taking advantage of any available exemptions and complying with all relevant laws and regulations.
Conclusion
The intersection of property and family law can be complex, and legal and property expertise needs to be consulted. If you require assistance then book in a call to speak with one of our family lawyers.
