Don't assume you'll pay full stamp duty: the concessions for pensioners and seniors

When people add up the cost of downsizing, one number tends to dominate: stamp duty. It's one of the largest costs of buying a home — often tens of thousands of dollars on a typical property — and ASIC's MoneySmart lists it plainly among the costs you have to cover when you buy, on top of the purchase price (ASIC MoneySmart, https://moneysmart.gov.au/manage-your-money-in-retirement/downsizing-in-retirement). For a lot of older Australians it's a genuine deterrent to moving at all: why sell up and buy something smaller, the thinking goes, if a big chunk of what you free up disappears in tax the moment you buy? Here's what many people don't realise — you may not have to pay the full amount. Several states and territories offer stamp duty concessions or exemptions for pensioners and seniors, and they can reduce that cost significantly, sometimes to nothing. This article is general information only, not personal advice.

Do the concessions exist — but are they state-based?

The first thing to understand is that stamp duty, sometimes called transfer duty, is a state and territory tax, not a federal one. As MoneySmart puts it, each state and territory sets its own rules and amounts for things that can help with your purchase or reduce your stamp duty (ASIC MoneySmart, https://moneysmart.gov.au/saving/save-for-a-house-deposit). That means there is no single national scheme — the rules, the thresholds and who qualifies are different in every jurisdiction, and they change fairly regularly with each state's budget.

Several states and territories do offer some form of relief for pensioners or seniors buying a home. Victoria, for instance, has long been known for a pensioner duty concession for eligible concession-card holders, and other states and territories have their own arrangements — some aimed specifically at pensioners or seniors, some more general. Because the exact thresholds and eligibility rules change often and differ enormously from one jurisdiction to the next, the important point isn't the fine detail of any one scheme, which may well have changed by the time you read this. It's that these concessions exist, they vary a great deal, and it's genuinely worth finding out what applies where you live rather than assuming you'll pay the full amount.

What do these concessions typically look for?

While the specifics differ by state, pensioner and seniors duty concessions tend to share a few common features, and knowing them helps you gauge whether you're likely to qualify — though you should always confirm the current rules with your own state or territory. Most schemes require you to hold an eligible concession card, such as the Pensioner Concession Card. Most apply a property value cap — a full concession below one price, a reduced one above it, and none once the price passes a ceiling — so the benefit is usually targeted at more modest purchases. The property generally has to be your home, your principal place of residence, rather than an investment. And in several states the benefit is a once-in-a-lifetime one per person or couple, so it's not something you can use repeatedly. Beyond these pensioner-specific schemes, some states also offer more general duty concessions — on new or off-the-plan homes, for example — that an older buyer might separately be able to use, so there can be more than one avenue worth checking.

Why can it change the whole decision?

This matters more than it might first appear, because stamp duty is precisely the kind of upfront cost that tips a downsizing decision one way or the other. If moving to a smaller home would free up capital but a large slice would vanish in duty, plenty of people decide it isn't worth the upheaval. A concession that cuts or removes that duty can flip the maths — turning a marginal move into a clearly worthwhile one, or simply meaning you keep thousands of dollars more of your own money. Because the sums involved can be so large, this is something to check before you commit to a purchase, not something to discover afterwards when the duty has already been paid. (Our companion pieces on the friction costs of downsizing and on strata levies cover the other moving parts of the sums.)

What do the worked examples show?

These show the difference between checking and assuming. They are illustrative only, not personal advice, and stamp-duty concessions vary by state and territory and change frequently — the figures below are illustrative, not a specific state's current rates.

Margaret, 70, is a single age pensioner with a Pensioner Concession Card, planning to sell her house and buy a modest unit for around $600,000, and she has quietly budgeted roughly $30,000 for stamp duty (an illustrative figure). On these facts the sensible first move is to check rather than assume: if her state offers a pensioner duty concession and her purchase price sits under the relevant value cap, the duty she actually pays could be a great deal less than she's budgeted — or nothing at all. On these facts it is generally rational for Margaret to contact her state or territory revenue office, or ask her conveyancer, before she commits, because the saving can run to many thousands of dollars she would otherwise hand over unnecessarily.

Robert and Helen, a homeowner couple in their late sixties, are looking at a larger downsizer apartment priced well above the typical concession value cap. On these facts a pensioner concession may not help them, because most schemes taper the benefit away above a ceiling and cut it off entirely at the top — but it's still worth confirming, and worth checking whether any general concession (for a new or off-the-plan home, say) applies instead. On these facts it is generally rational for them to get the current position from their revenue office or conveyancer rather than guess in either direction, since assuming they don't qualify can be just as costly a mistake as assuming they do.

What is the one thing to do — check before you buy?

The practical takeaway is refreshingly simple: don't assume you'll pay full stamp duty. Before you buy — especially if you're a pensioner or senior downsizing — check your state or territory revenue office (each has one, easily found online), or ask your conveyancer or solicitor, whether a duty concession or exemption applies to you. Because the rules and the value caps change frequently and differ between states, confirm the current position rather than relying on what a friend paid a few years ago or what applied last time you moved. It takes little effort, and the payoff can be many thousands of dollars — money far better kept in your retirement than handed over in a tax you may not have needed to pay in full.

Sources

• ASIC MoneySmart — Downsizing in retirement
• ASIC MoneySmart — Save for a house deposit