Equity partners and the First Home Buyers Assistance Scheme

Conditions for transactions involving an equity partner

The following conditions apply to transactions which involve shared equity partners:

• An equity partner cannot be a spouse of an eligible purchaser or eligible transferees.
• The transaction must be an eligible transaction
• An equity partner’s share or if more than one equity partner, their combined share in the ownership of the property cannot exceed 50%.

Under section 71(7)(b) of the Duties Act 1997, if the equity partner purchasers’ interests total 5% or less, the eligible purchasers are entitled to the full exemption or concession.

If the first home buyer’s spouse has previously owned a residential property in Australia or received a benefit under the First Home Buyers Assistance Scheme, the first home buyer will not be eligible for benefits regardless of whether the spouse is a party to the contract.

Transfer duty calculation for transfers involving equity partners

Equity partners acquiring more than a 5% interest in the property are liable to pay a proportion of the transfer duty, under the Duties Act 1997, based on the percentage interest in the property they are acquiring.

Accordingly, an equity partner must pay their transfer duty:

• within 3 months after the liability to pay the duty arises, or
• upon settlement/transfer of land, whichever occurs earlier.

The First Home Buyers Assistance Calculator can be used to determine the transfer duty payable under shared equity arrangements

Example 1

A first home buyer is purchasing a new home with their parent in equal shares.

As the transfer is for the whole of the property and the first home buyer is acquiring a 50% interest, they will be eligible to apply for FHBAS.

The parent is liable to pay 50% of the transfer duty, calculated on the total dutiable value of the home.

Example 2

A first home buyer is purchasing an existing home with a relative and will obtain a 95% interest in the property.

The relative (equity partner) will obtain a 5% share of the property to assist with financing the loan.

In accordance with section 71(7)(b) of the Duties Act 1997, if the equity partner purchasers’ interests is 5 % or less, the entire transaction will be eligible for an exemption or concession under FHBAS.

Example 3

A first home buyer is purchasing a home with their spouse who has previously owned residential property in Australia.

The first home buyer would like to apply for FHBAS and include their spouse as an equity partner.

A shared equity arrangement cannot be used for agreements or transfers involving a spouse, additionally as the spouse has previously owned residential property in Australia the first home buyer is not eligible for FHBAS in accordance with Section 71 (2)(b) of the Duties Act 1997.

How to process or submit applications involving equity partners

Transactions involving equity partners can be assessed on Electronic Duties Return (EDR).

The instructions below details the EDR process:

• Select the relevant document type:
  • “Agreement for sale of land – First home buyer” or
  • “First home buyer – off the plan purchasers”
• Answer YES to the question “Does your first home application include other purchasers?”.
• Enter the eligible purchaser’s interest (this is required even if the equity partner’s interest is less than 5%).
• The equity partners transfer duty liability will automatically be calculated based on the details entered.
• The Duties Notice of Assessment will show the parties that are liable for transfer duty.

eDuties

As per the Duties Document Matrix (PDF, 403.7 KB), any assessment that cannot be assessed in EDR must be submitted in eDuties using application type:

• First Home Buyer Assistance Scheme (FHBA)
• First Home Buyer Assistance Scheme (FHBA) involving a trust- Sections 69 - 80A

To avoid delays, ensure all relevant evidentiary requirements, proof of identity documents and forms are submitted in eDuties at the time of application.

Helpful information

Equity partners who are foreign persons

Under Chapter 2A of the Duties Act 1997, equity partners who are foreign persons will be liable to pay a proportion of surcharge purchaser duty in addition to transfer duty, based on their percentage interest in the property they are acquiring.

For further information about foreign persons please refer to the surcharge purchaser duty guide regarding this topic.