Stamp duty is a major deterrence for seniors looking to downsize and unlock the equity in their home, however many are not aware of options available to avoid this added cost.
As a ballpark guide to stamp duty/transfer duty costs, downsizing to a modest home of about $500,000 would see a buyer faced with paying an estimated $8,750 in Queensland, an estimated $17,990 in stamp duty in New South Wales, and $21,970 in Victoria. Currently, Victoria offers a stamp duty concession for pensioners on properties up to $330,000 with a sliding scale up to $750,000, however the other states do not offer any concession.
Ingenia Communities Chief Operating Officer Nikki Fisher said many seniors were unaware there were ways to avoid paying stamp duty costs.
“Many people do not realise an alternative housing solutions exists to provide seniors with ways to access their home equity while negating the need to pay stamp duty fees,” Ms Fisher said.
“For example, the Active Lifestyle Estates model is unique in that buyers purchase a new, architecturally-designed manufactured home and lease, rather than own, the land which eliminates the need to pay stamp duty.
“This ensures a much more affordable entry price point and means new residents are often able to free up a substantial amount of equity raised in the sale of their previous home.
“At Active Lifestyle Estates Chambers Pines in Logan, brand new homes start from $210,000 and have proven popular with buyers.
“The demand has been high due to the affordability and the low barrier of entry with no stamp duty fees payable,” Ms Fisher said.
The Actuaries Institute recently released a green paper Unlocking Housing Wealth which made a number of policy-based recommendations to help Australians improve their retirement standards, including stamp duty relief for retirees, to address the financial disincentive of this tax and encourage more to downsize.
“It is well-documented that this is a particular issue affecting asset-rich, cash-poor seniors, who are subsequently staying in a large family home to avoid paying tens of thousands of dollars in stamp duty in order to downsize,” Ms Fisher said.
With the tax reform process expected to last quite some time, the options for seniors to avoid paying stamp duty fees right now is possible through any of the 21 Active Lifestyle Estates communities across Australia.
The land lease agreement eliminates the need for residents to pay stamp duty, ensures a much more affordable entry price point and means new residents are often able to free up a substantial amount of capital raised in the sale of their previous home.
In term of leasing, owners pay one weekly site fee inclusive of maintenance and access to shared facilities. This fee varies, but is generally between $120 and $170 per week, depending on individual circumstances such as eligibility for rent assistance.