Spousal and Domestic Partner Transfers

Property can be transferred between spouses and domestic partners during the relationship or due to a breakdown of relationship.

What is a Spouse or Domestic Partner?

A “spouse” means a person to whom another person is married. A “domestic partner” means a person whom another person lives with as a couple on a genuine domestic basic (irrespective of gender), for a period of 2 years. Domestic partners are not married to each other.

Consideration (Money)

A transfer between spouses or domestic partners does not require consideration or money to be paid. If the parties are transferring the property during the course of the relationship, the consideration will be natural love and affection or a gift. If the parties are transferring the property upon ceasing a relationship, then the consideration will be the breakdown of relationship.

Stamp Duty  

If a spouse or domestic partner transfers a property from one to the other (i.e., A to B) or from both parties to one spouse or domestic partner (i.e., A and B to B), provided that the property is the principal place of residence of at least one of the partners and that person lives in the property for a continuous period of at least 12 months commencing within 12 months of the transfer, then nil stamp duty will be payable on the transfer.

However, from the 1 July 2017 property transfers between spouses and domestic partners which involves investment properties, irrespective of whether the properties are domestic, industrial or commercial properties will be liable for stamp duty. Stamp duty will be calculated on the current market value of the property.

Capital Gains Tax

Whenever parties are transferring commercial or investment properties, capital gains tax advice should be sort.  

Mortgages

 Any certificate of title that is affected by a registered mortgage will need either the consent of the mortgagee to the registration of a transfer or the discharge of the existing loan and a new loan applied. This process can take considerable time and early contact should be made with your mortgagee to discuss their requirements in this regard.

If there is no mortgage on the property, the transfer process is simplified.  

Summary
Property can be transferred between spouses and domestic partners during a relationship or due to a breakdown of relationship.

Victoria has traditionally offered generous stamp duty exemptions for transfers between spouses or domestic partners, without distinction between principal place of residency properties or investments properties. As such, transfers were often carried out for strategic purposes, resulting in favourable tax outcomes from the parties.  

However, from the 1 July 2017 the duty landscape has changed and transfers of investment property are now subject to duty based on the current market value of the property. This is a significant change meaning that transfers of investment property between partners will attract the same duty liability as the purchase of the property.

For further information on transfers between spouses and domestic partners or to book an appointment with our senior property solicitor Carly Burke, please contact us on 5303 0281 or at reception@ballaratlawyers.net.au.

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The information on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances.

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