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the sum of the amounts by which the unencumbered value of the dutiable property transferred, or agreed to be transferred, to a person by the partition exceeds the unencumbered value of the interest held by the person in the dutiable property transferred, or agreed to be transferred, to each person by the partition immediately before the partition, and
the sum of any consideration for the partition paid by any of the parties.
A partition can be either:
equal - where all transferees receive property of the same value as their entitlement, or
unequal - where any of the transferees receive property valued in excess of their entitlement.
To establish the above, the following documents are required:
current Certificate of Title(s) to confirm the co-ownership and interest held by each owner (obtained from Land Registry Services)
deed of partition or agreement (if applicable) and/or executed transfers.
The information and examples below will assist in determining how duty is assessed.
Equal partitions
An equal partition is when:
the partitioned land is divided between the co-owners, and no co-owner receives more than the value of their previous entitlement (interest held) and
any consideration paid to any of the co-owners does not exceed their entitlement.
As there is no dutiable value for the transaction, duty of $100 under section 30(4) of the Duties Act 1997 is payable on each instrument that effects the partition
For transactions entered into before 1 February 2024, the minimum duty for each instrument effecting a partition is $50.
Party A and Party B bought land and built two villas.
They agreed in a deed of partition that Party A would take Villa 1, Party B would take Villa 2.
After construction, the villas were converted to strata title, making them co-owners of both properties as tenants in common in equal shares.
Each villa was valued at $500,000, giving a total value of $1 million.
Each party is entitled to 50%, or $500,000, of the total value.
The dutiable value is calculated as follows:
Parties
Party A (Villa 1)
Party B (Villa 2)
Entitlement before partition
50%
50%
Entitlement value
$500,000
$500,000
Value of property received
$500,000
$500,000
Excess/Deficit
Nil
Nil
Consideration paid
Nil
Nil
Dutiable value
Nil
Nil
Since neither party is receiving more than their 50% entitlement and no consideration is being paid, the transaction has no dutiable value and ad valorem duty does not apply.
Each instrument (e.g. deed and transfers) will be liable to the minimum duty of $100.
Party A and Party B co-own two properties in NSW as tenants in common in unequal shares (30/70)
They agreed in a deed of partition that Party A takes Property 1 (valued at $300,000) and Party B takes Property 2 (valued at $700,000)
Party A’s entitlement is $300,000 and Party B’s entitlement is $700,000.
The dutiable value is calculated as follows:
Parties
Party A (Property 1)
Party B (Property 2)
Entitlement before partition
30%
70%
Entitlement value
$300,000
$700,000
Value of property received
$300,000
$700,000
Excess/Deficit
Nil
Nil
Consideration paid
Nil
Nil
Dutiable value
Nil
Nil
Since neither party is receiving more than their entitlement and no consideration is being paid, the transaction has no dutiable value and ad valorem duty does not apply.
Each instrument (e.g. deed and transfers) will be liable to the minimum duty of $100.
Unequal partitions
An unequal partition is where, after the partitioned land is divided between the co-owners, one or more co-owner receives more than the value of the interest they were entitled to prior to the partition. In this case, there is an excess and this excess amount is the dutiable value.
Party A and Party B bought land and built two villas.
They agreed in a deed of partition that Party A would take Villa 1, Party B would take Villa 2.
After construction, the villas were converted to strata title, making them co-owners of both properties as tenants in common in equal shares.
Villa 1 was valued at $600,000 and Villa 2 $800,000, giving a total value of $1.4 million.
Each party is entitled to 50%, or $700,000, of the total value.
The dutiable amount is calculated as follows.
Parties
Party A (Villa 1)
Party B (Villa 2)
Entitlement before partition
50%
50%
Entitlement value
$700,000
$700,000
Value of property received
$600,000
$800,000
Excess
Nil
$100,000
Deficit
$100,000
Nil
Consideration paid
Nil
Nil
Dutiable value
Nil
$100,000
As Party B is receiving a share that is in excess of their entitlement, this transaction is liable on the dutiable value of $100,000.
In this example the general rate of transfer duty is applied to the deed and each transfer is liable for the minimum duty of $100.
When calculating the dutiable value of unequal partitions without consideration, the excess amounts that exceed entitlement must be equal to the deficits.
Party A and B co-own 2 parcels of land in NSW as tenants in common in unequal shares (30/70).
The valuation for Property 1 is $600,000 and Property 2 is $800,000 giving a total of $1.4 million.
The parties entered into a deed of partition where they agreed that Party A will pay $170,000 and receive Property 1 and Party B will receive Property 2.
On the interests held; Party A’s entitlement is $420,000 and Party B's entitlement is $980,000
The dutiable amount is calculated as follows.
Parties
Party A (Property 1)
Party B (Property 2)
Entitlement before partition
30%
70%
Entitlement value
$420,000
$980,000
Value of property received
$600,000
$800,000
Excess
$180,000
Nil
Deficit
Nil
$180,000
Consideration paid
$170,000
Nil
Dutiable value
$180,000
Nil
The dutiable value is the greater of the consideration paid, and the excess any party is receiving.
As Party A is receiving Property 1 which is $180,000 more than their entitlement and paying $170,000 to Party B, duty is calculated on the excess of $180,000.
In this example duty at the general rate is applied to the deed and each transfer is liable for duty of $100.
When calculating the dutiable value of unequal partitions without consideration, the excess amounts that exceed entitlement must be equal to the deficits.
Anti-avoidance criteria
Under section 30(6) of the Duties Act (1997), section 30 does not apply in respect of a partition if it is part of a scheme to avoid duty on an exchange of land that was not jointly held by the parties before the scheme was entered into.
Surcharge purchaser duty
For unequal partitions, transferees that are foreign persons must pay surcharge purchaser duty (SPD) on any excess amount they receive above their entitlement.
Dual entitlement is a practice followed by NSW Land Registry Services (LRS) to create a folio identifier in the names of the different owners of each part of a lot in a deposited plan. Dual entitlement acts as a stay of registration until single ownership of an entire lot is obtained.
The transfer of each specific entitlement is liable to ad valorem duty calculated on the value of the property being transferred.
Below is an example of how a dual entitlement occurs:
Company A owns Lot 1/1111 and Company B owns the adjoining Lot 2/1111.
They consolidate the properties to create Lot 3/2222. The title for the new Lot 3/2222 will show the registered proprietors in the First Schedule as:
Company A of the part formerly in 1/1111
Company B of the part formerly in 2/1111
If the consolidated title is subsequently subdivided, any transfers of individual lots to A or B will be liable to duty calculated on the value of any of A’s property being transferred to B and vice versa.
This example of an NSW title search illustrates a dual entitlement scenario: each registered proprietor holds a specific interest in the title, and the title confirms they do not co own Lot 3 DP 2222.
Processing and lodgement requirements
These transactions must be submitted through eDuties using application type: Other
Evidence including proportional valuations, survey reports and plans of the property to be transferred should be included to support the assessment of duty .
If a party to the deed of partition will hold their interest in another party’s lot on trust for that party until the partition is completed, then this arrangement may be subject to duty as a declaration of trust.
Land which is the subject of a partition is required to be held jointly, any partitioning of estate land in NSW which is held by a trustee, executor or executrix does not fall within section 30. Before a property can be partitioned, it must first be transferred to the beneficiaries entitled under the terms of the will.
Only after this transfer is completed can the beneficiaries proceed with a partition of the property.
