Office of State Revenue NSW announces NSW Mortgage duty is to be abolished in stages
Mortgage stamp duty has been charged on advances at a rate of $5.00 for the first $16,000.00 of the advance and thereafter 4 cents in every $100.00 of the advance, with certain exceptions in relation to Mortgages which refinance existing Mortgages.
The Office of State Revenue NSW has announced the gradual abolishment of mortgage stamp duty as follows:
- Owner occupied housing from 1 September 2007
- Investment housing from 1 July 2008
- All advances from 1 July 2009
Owner Occupied Housing
Home owners are now finally experiencing some relief from the NSW State Government with the recent abolition of mortgage stamp duty for advances made solely for the purpose of ‘owner occupied housing’ and no other advances.
An advance is made for the purpose of ‘owner occupied housing’ if it is to be applied wholly or predominantly for one or more of the following purposes:
(a) financing the acquisition of a residence,
(b) financing the construction of a residence,
(c) financing alterations or additions to a residence,
(d) financing the acquisition of residential land,
(e) repaying another advance, if the advance to be repaid was made for the purpose of owner occupied housing.
A ‘residence’ is defined as a private dwelling house that is used and occupied or intended to be used and occupied by the borrower/debtor, or by any of the borrowers/debtors, as place of residence.
Borrower(s)/Debtor(s) must be natural persons, however it is worth noting that the structure of the facility may incorporate a company as a Mortgagor/Guarantor (being the entity registered on the title of the security property).
Where the mortgagor is also a natural person, the mortgage can be registered without having to be stamped by the OSR. This process has been agreed to after discussions with the Department of Lands.
Investment Housing
From 1 July 2008, mortgage stamp duty shall no linger be charged on advances made for the purpose of ‘investment housing’ and no other advances.
An advance is made for the purpose of ‘investment housing’ if it is to be applied wholly or predominantly for one or more of the following purposes:
(a) financing the acquisition of investment housing,
(b) financing the construction of investment housing,
(c) financing alterations or additions to investment housing which includes:
i. any improvements to the parcel of land on which the dwelling house is constructed, and
ii. the maintenance, repair or renovation of the dwelling house or of an improvement referred to in paragraph i,
(d) repaying another advance, if the advance to be repaid was made for the purpose of investment housing.
‘Investment housing’ is defined as any private dwelling house that is used, or is intended to be used or sold, for business or investment purposes (or both) by the borrower or by any of the borrowers.
Similarly to the requirements for applicable exemptions of mortgage duty for ‘owner occupied housing’, borrower(s)/debtor(s) shall be required to be natural persons, however it is again worth noting that the structure of the facility may incorporate a company as a Mortgagor/Guarantor (being the entity registered on the title of the security property).
Further Advances
No mortgage stamp duty will be payable on any advances made on or after 1 July 2009.
