How Formalising Your Property Settlement Can Save You Thousands Through Stamp Duty Exemptions

29 July 2024 | Written by Warwick Gilbertson | Personal Law, Family Law

A stamp duty exemption applies post separation to a transfer or sale of matrimonial property if the property is transferred or to one of the parties to the marriage or to a child or children of either of the parties to the marriage (s.68, Duties Act 1997 (NSW)).

A similar exemption also applies where there is a breakdown of a de facto or domestic relationship (s.68(1A) and (2) Duties Act (NSW)).

However, for the exemption to apply the transfer or agreement must be drafted in accordance with a binding financial agreement made under the Family Law Act or an order of a Court.

Matrimonial property is defined to mean property of the parties to the marriage or of either of them (s.68(5) Duties Act (NSW)).

If duty was paid on a transfer or sale and the marriage was dissolved or annulled or has broken down irretrievably in the circumstances noted above the Chief Commissioner must reassess the transfer or sale and refund the duty paid (s.68(4) Duties Act (NSW)).

These exemptions can also apply if the transferor is not actually a spouse, i.e. where the transfer is made by a property held by a family trust.

A stamp duty exemption also applies to applications to transfer registration of a motor vehicle where:

the vehicle was registered in the name/names of the party/parties to a marriage; and
the vehicle was matrimonial property; and
the transfer was pursuant to a binding financial agreement or an order of a Court; and
the Chief Commissioner is satisfied that the transfer has been made for the purpose of dividing matrimonial property as a consequence of the dissolution, annulment or breakdown of the marriage (s.267(6) Duties Act (NSW)).

The exemption from the payment of stamp duty could save parties tens of thousands of dollars. The average housing price in Newcastle is approximately $940,000. Generally, the amount of stamp duty payable on a $940,000 property is $37,000. Therefore if you are transferring a property post separation the costs of a binding financial agreement or an order of a Court will in the long run be less than the thousands of dollars saved from the stamp duty exemptions.

The current rates and thresholds are outlined in the table below:

Value of the property subject to the transaction	Rate of duty
$ 0 – $17,000	$1.25 for every $100 or part of the value
$17,000 – $36,000	$212 plus $1.50 for every $100, that the value exceeds $17,000
$36,000 – $97,000	$497 plus $1.75 for every $100, that the value exceeds $36,000
$97,000 – $364,000	$1,564 plus $3.50 for every $100, that the value exceeds $97,000
$364,000 – $1,212,000	$10,909 plus $4.50 for every $100, that the value exceeds $364,000
Over $1,212,000	$49,069 plus $5.50 for every $100, that the value exceeds $1,212,000
Premium Property Duty: over $3,636,000	$182,389 plus $7.00 for every $100, that the value exceeds $3,636,000

As family lawyers, we are not qualified to provide you with financial advice. We are, however, required to understand the potential tax and duty consequences of property settlements as duty and taxation issues often arise during property settlements which should cause you to seek input from your accountant before finalising a settlement. It is extremely important that you have a specialised family lawyer who can identify these issues and work with you and your accountant to achieve you the most financially beneficial outcome for you from your property settlement.