The NSW State Government has announced that a new transfer fee will be introduced on the transfer of properties valued over $500,000. In his media release the Minister for Lands, Tony Kelly, advised that the fee will be introduced to “strengthen the equity of NSW property transactions and improve the security of the Torrens Title system”, although it is unclear as to how the fee will achieve these aims.

The new Trasnfer Fee Tax will be charged from 1 July 2010 as follows:

$0 to $500,000 – $190

$500,000 to $1 million – $190 +0.2% of the value of the property over $500,000

over $1 million – $1,190 plus 0.25% of the value of the property over $1 million

$1,190 plus 0.25% of the value of the property over $1 million

The new transfer fee is said to commence as of 1 July 2010. It is also unclear as to whether any time limit will be imposed on payment, as it is with stamp duty, and also as to which government agency will be responsible for collecting the fee. The Land and Property Management Authority (LPMA) is responsible for the title registration system in NSW and currently charges a fixed fee of $190 on all transfers, irrespective of value. However, the Office of State Revenue (OSR) is responsible in NSW for the collection of stamp duty on the transfer of dutiable property and has policies to deal with matters such as late payment and determining the value of property for stamping purposes.

The effect of the new transfer fee on the purchase of the average residential property is arguably not great. On a purchase price of $750,000, the new transfer fee payable will be $500 and on a purchase price of $1.5 million, the fee is $2,250.

However, on higher valued properties the new transfer fee may be significant. An additional $23,500 will be payable on a price of $10 million. On a price of $200 million, a transfer fee of almost $500,000 will be payable, an increase of over 4.5% on the current stamp duty collected on a transaction of this size.

(Source: Holding Redlich Lawyers)