Federal government calls for state government stamp duty concessions for downsizing seniors

The federal government has called on state governments to introduce stamp duty concessions for seniors to help encourage them to downsize.

Federal ministers Jenny Macklin and Mark Butler released a joint statement announcing the $112 million pilot scheme to encourage seniors to downsize and calling for stamp duty concessions to make it work.

“We would also like to see state governments move to assist seniors who wish to downsize by introducing or improving concessions on stamp duty, and therefore removing a further impediment to downsizing,” they said.

The federal budget announcement on Tuesday included a scheme to make it easier for pensioners to downsize their family home by excluding any profits from means-testing for the pension.

Those eligible will be able to invest up to 80% of the net gain from downsizing, up to a limit of $200,000, in a special account which is excluded from means testing for 10 years.

The scheme has been cautiously welcomed by representative bodies but they say that stamp duty remains the biggest impediment to downsizing for seniors.

Groups say stamp duty costs are prohibitively expensive and make downsizing an expensive choice even with this scheme.

The REIA’s Peter Bushby says the scheme is a positive move but it doesn’t go far enough.

“It is most unfortunate that stamp duties as an impediment to downsizing have again been ignored,” Bushby said.

“The Budget has called on the jurisdictions to reform inefficient state taxes including stamp duty. This pays lip service to the need for reform and ignores the leadership role that the Commonwealth should be taking.”

ACT is the principal leader in stamp duty concessions for seniors.

Groups are also criticising the stringent restrictions on the budget.

The scheme is only available to people who have owned their home for 25 years or longer.

Mary Wood, executive director of the Retirement Living Council, says “25 years is overly onerous and don’t reflect the needs and circumstances of most aged pensioners”.

Michael O’Neill, chief executive of Nation Seniors Australia, says the special account is restrictive and means pensioners won’t be able to use the money for daily expenses.

The three year trial will commence on July 1, 2014 where senior Australian homeowners who downsize when buying another home will have an option to invest at least 80 per cent of surplus funds remaining (up to a cap of $200,000) in a special account. The funds invested in the account would be exempt from the age pension means test for up to 10 years. The scheme would only be available to Australians over age pension age who have owned their home for at least 25 years.