Concessional NSW Duty on property transfers to SMSFs increased

The current duty concession on the transfer or sale of real estate held by an individual to their SMSFs has been increased from $50 to $500.  This changes applies from 1 July 2014.

Under the concession provided by s62A, if an individual transfers or sells NSW real estate, of which they are the owner (and not held by them in trust), the transfer duty will be a fixed rate of duty (previously $50 but now $500) rather than the normal ad valorem duty.  Where there was a sale and purchase – and the trustee of the SMSF effected the purchase under a limited recourse borrowing arrangement the duty is $500 (there has been no change in this duty).

This concession can be very significant.  If the SMSF purchases NSW real estate with a market value of $500,000, the duty which would apply (but for the concession) is $17,990.  With the concession, the saving in duty is $17,490.

The concession only applies if the real estate is owned by an individual and the real estate is transferred to or purchased by the trustee of the individual SMSFs and is held by the trustee solely to provide retirement benefits for the individual.  Further the real estate must be business real property (otherwise the trustee would not be permitted to acquire the real estate).