Did you know you could subdivide your land without paying taxes? Most landowners stall the exciting prospect of subdividing a property because they fear incurring significant stamp duty. It’s a common misconception that any division or transfer of land automatically comes with a hefty tax bill. However, a specific provision allows co-owners to partition their property and legally avoid this major expense, turning thousands of dollars in potential tax into a simple administrative fee. This isn’t a loophole, but a legitimate pathway that requires careful navigation. In this case study, we show how we helped our client save significantly while unlocking their property’s full potential.
What Happened
Our clients, who are partners, jointly owned a single parcel of land in NSW. They aimed to subdivide the property into two equal lots, with each partner taking full ownership of one.
They were concerned about the financial implications, particularly the substantial stamp duty that is typically payable on property transfers. This potential tax liability was a major obstacle to moving forward with their plans.
What We Did
We identified an opportunity for the clients to legally partition their land without incurring stamp duty by applying NSW Revenue Ruling DUT 035 v2.
This ruling allows for a concession on stamp duty for the “partition” of property between co-owners. A partition occurs when co-owners divide jointly held property and each receives a specific portion in place of their share in the whole.
If each person receives land equal to or less than their original share’s value, the transfer is not dutiable. For our clients, who owned the land 50/50, subdividing it into two lots of equal value meant there was no change in the overall beneficial ownership.
We handled the process, preparing legal documents and lodging subdivision plans in full compliance with the ruling’s requirements.
The Outcome
The subdivision was successfully completed and registered. By applying the specific provisions of DUT 035 v2, our clients paid only a nominal duty instead of thousands of dollars calculated on the land’s market value.
The clients were satisfied, achieving property goals without stamp duty and freeing capital for future plans with new lots.
