Principal Place of Residence (PPR) Concession on Stamp Duty
What is stamp duty?
Stamp duty is a tax imposed by the state government on the transfer of property that is payable by the purchaser (or transferee) of that property. The amount of stamp duty payable is calculated according to the dutiable value of the property being purchased.
The dutiable value of a property is either the price a purchaser has paid for the property or its market value, whichever is greater. This means that a property given as a gift, acquired through a trust or bought at a discounted price will still attract stamp duty in an amount that reflects the market value of the property.
What is the PPR Concession?
A purchaser who is intends to primarily reside at the property they have purchased may be eligible to apply for a concession on the stamp duty payable on that property.
Who is eligible Principal Place of Residence concession?
The PPR concession is available to any purchaser (not just first home buyers) who intend to live at the purchased property for a minimum of 12 months. However, the PPR concession only applies to properties valued at $550,000 or less.
In order to be eligible for the PPR concession, a purchaser must:
1. Begin using the property as their principal place of residence within 12 months of becoming entitled to possession of the property; and
2. Reside at the property for a continuous 12-month period.
Where there is more than one purchaser, only one purchaser is required to meet the above requirements to be eligible for the concession.
Importantly, a piece of land cannot be a person’s PPR unless a residential building is legally constructed on the land. This means that a vacant block of land or a building constructed solely for commercial use will not attract the benefits of the concession, even if the property is valued at $550,000 or less.
How is the PPR calculated?
For PPR properties valued between $130,000 and $440,000, stamp duty is calculated at a rate of $2,870 plus 5% of the dutiable value in excess of $130,000. Compared the duty payable if the property was not a PPR, this is a rate reduction of 1%.
For PPR properties valued between $440,000 and $550,000, stamp duty is calculated at a rate of $18,370 plus 6% of the dutiable value in excess of $440,000. Compared to the duty payable if the property was not a PPR, this is duty reduction of $3,100.
Building a PPR on vacant land
If a purchaser intends to build a home on vacant land which will become their PPR, then they must meet one of the following requirements in order to attract the PPR concession:
1. The purchaser must occupy their new home within 12 months of the date they can lawfully live in it; or
2. The purchaser must occupy their new home within 36 months from the date of settlement.
To be eligible for the concession, the value of the vacant land must be $550,000 or less. Notably, a purchaser’s eligibility is not impacted by the value of any building contract attached to the land.
Failure to comply with PPR requirements
If the purchaser does not have any grounds to object, they may register their interest in the land by lodging a caveat on Title. This will ensure the purchaser’s interest is protected up until settlement.
How does the release occur?
If a purchaser fails to comply with PPR requirements, the ordinary stamp duty will be chargeable, and the purchaser is liable for that amount. If a purchaser becomes aware that they will not meet the PPR requirements after receiving the concession, they are required to notify the Commissioner of State Revenue within 30 days.
Our advice
The process of claiming stamp duty for your purchase and applying for the relevant concessions on your behalf is part of our conveyancing services. If you have any queries about stamp duty, PPR concession or any other related matters please contact our property and conveyancing team.
Author, Danielle Murphy.
