As we get older, some things just get harder to manage.

That goes especially for the traditional family home. When you’re in your 30s, maintaining a house with two big yards is something to look forward to on the weekend.

But when you’re in your 60s, you just want to enjoy your retirement.

For many of my parents’ generation – the Baby Boomers – the decision to downsize is a tough one.

Some people don’t want to let go of the house they raised their children in. Others see downsizing as one step closer to the nursing home. Some see it as “trading down”; letting go of a sizable bricks and mortar asset to move into something smaller.

Recent changes to superannuation law are enticing many of these “fence sitters” to commit to downsizing.

Under the new rules, retirees can funnel up to $300,000 from the proceeds of the sale of a home they’ve owned for 10 or more years into their super fund. If you’re a married couple, that means between you, up to $600,000 from that sale could be invested into your super – and all the tax benefits your super fund enjoys.

On the surface, this might seem like the chance for a windfall: sell the family home, or an investment property, and move into something cheaper and live comfortably on the extra funds you’ll free up for your super.

But as an estate lawyer, I can tell you it’s never that simple.

Already, plenty of retirees are taking advantage of this new scheme, meaning demand for smaller homes is increasing. And not only are you up against other retirees in this market, but younger Australians are increasingly seeking apartments or townhouses to match their busy lifestyles.

That means you may not have the buying power you’d like when re-entering the housing market and could take a hit in stamp duty.

More importantly, how will the sale affect your entitlement for the aged pension? Cash is not exempt from aged pension means testing, so by liquidating your biggest asset you could be shooting yourself in the foot. Other questions to consider include:

• Is the house you’re looking to sell Capital Gains Tax exempt?
• Is the property owned as part of a trust, or subject to finance?
• How will the sale affect your children and grandchildren’s inheritance?

Downsizing can be a liberating experience, something that can actually help you enjoy your retirement more by freeing you up to live, but it needs to be done properly.

At Welden & Coluccio Lawyers, we are Estate Law specialists. This means we help people make decisions that will benefit them and their families into retirement and beyond.

If you’re considering selling your home to take advantage of this new super scheme, make an appointment to speak to us, as no decision happens in a vacuum.

It is wise to see what is proposed all from all angles.

A recent Revenue Ruling by the Commissioner of State Taxation has now made clear that the use and implementation of including the phrase ‘and or nominee’ in a contract, most likely for the purchase of land, is no longer required.

A word of warning. If you think it is now safe to begin executing contracts for the purchase of land on behalf of family and friends and so on, think again. Signing a contract for the purchase of land, or any contract for that matter, is a serious step and should not be undertaken without considerable thought and legal advice. If the intended purchaser, perhaps your friend, pulls out of the deal or fails to settle, the vendor will sue YOU. After all, you signed the contract and until settlement occurs you are required at law to fulfill all of the purchaser obligations, including to settle and purchase the property.

First things first, what is ‘and or nominee’ and why was it frequently used?  By using the phrase ‘and or nominee’ after the name of a purchaser, allowed one party to sign the physical contract for the purchase of land, whilst reserving the ability to register the actual owner of the property recorded on the title deed in another.

The best example is the purchase of property at an auction.  Once the bidding has ended the highest bidder must immediately execute the contract for the purchase of the land. On many occasions, the intended purchaser may not be able to physically attend the auction but has given authority and instructions to a third party to bid and execute the contract on their behalf.  In such an instance, the actual purchaser, Mr X, authorised and instructed the winning bidder, Mrs Z, to execute the contract. The name of the purchaser would be recorded as Mrs Z and or nominee.  Shortly after the contract was signed the letter of agency is produced and the Memorandum of Transfer is drafted with Mr X appearing as the actual purchaser.  What is often overlooked is that the letter of agency must pre-date the execution of the contract.

Another avenue for those that have executed a contract for the purchase of land to own it in another name is to assign the contract by way of a deed, another short written contract. In our previous example, if the letter of agency did not exist, or perhaps Mrs Z and Mr X wish to hold the land in a company which has not yet been created, Mrs Z can assign her interest in the contract by deed to the new company.
When it comes to Stamp Duty, a State assessed tax enshrined in the Stamp Duties Act 1923, which is charged on certain documents and transactions (usually where a transfer of ownership has occurred), it has been the previous practice of the Commissioner for State Taxation to require evidence of duty being payable not only on the Memorandum of Transfer but also the Deed of Assignment.  Stamp Duty on the Deed of Assignment is paid on the amount of the deposit paid.

Back to the new ruling. The Commissioner of State Taxation has confirmed he will adopt and recognise the existing common law that a purchaser recorded in a contract may direct (without the need for a deed of letter of agency) the vendor who to transfer the property to.  This will now avoid the need for letters of agency, Deeds of Assignment and the use or overuse of the phrase and or nominee.

Signing any sort of legal document without legal advice is risky. You should always seek professional advice on all legal documents before signing. Welden & Coluccio Lawyers are here to assist and can provide expert legal advice on a range of written contracts including the purchase, or sale, of real estate property.

As we enter the New Year many people use the holiday break as an opportunity to discuss the potential purchase of big ticket items.  When speaking about ‘big ticket’ items I am specifically referring to the purchase of a new family home, investment property, or vehicle (car, boat).  Similarly, January is frequently the time of year when many people start making plans to start a new business enterprise. When thinking about any of these purchases it is crucial to consider the impact of stamp duty when calculating the overall cost of this investment.

Stamp Duty is a State assessed tax enshrined in the Stamp Duties Act 1923 which is charged on certain documents and transactions (usually where a transfer of ownership has occurred).

Stamp Duty is charged at either a flat rate or an ad valorem rate (based on the value of the transaction) depending on the particular document or transaction.

Although it is common (and very practical) for the purchaser to pay the Duty assessed upon any document or transaction, the Act does not record this.  In the event an audit takes place by Revenue SA and it is found Duty has not been paid on a particular transaction,  even the seller, not the purchaser, may be ordered to make payment.

The following documents can attract Stamp Duty;

•  Insurance documents,
• Leases,
• Mortgages,
• Motor vehicles transfers (including cars, boats and motorcycles)
• Share transfers, and most significantly,
• Land and/or house

Most of us will pay Stamp Duty at some point in our lives, most commonly when we buy a home.  It sometimes comes as a surprise at how much the stamp duty is, especially when it is calculated on the basis of the value of the transaction.  For instance, when purchasing a new residential property at a cost of $700,000, you can expect to add an additional $32,330 (plus a further $5,165.50 registration fees) over and above the cost of the property!

However, there are a number of concessions and/or exemptions available to reduce or relieve people of the payment of Duty.  Some examples are as follows;

1.  First Home Concessions available to first home buyers who meet certain criteria,
2. The transfer by an estate to a beneficiary in accordance with the Will of a deceased person,
3. Stamp Duty Concession on the Purchase of an Off-the-plan Apartment – which relates to a new apartment or substantially refurbished apartment within the City of Adelaide.
4. The transfer of a shared residence or motor vehicle between spouses or former spouses or domestic partners, and
5. The transfer of a family farm between related parties (which is defined) where the land is used wholly or mainly for the business of primary production, is greater than 0.8 hectares and a business relationship existed between the parties for at least 12 months before the transfer was executed.

There are other exemptions but there are also instances when a higher rate of Duty is payable, such as the transfer of a business (or share or unit in a unit trust of that business) which is land rich (now described as having land in SA worth more than $1M – ignoring loans and mortgages).

The calculation of Stamp Duty can be very complex and must be considered, with all the exemptions and higher rates that might be available prior to embarking on any transaction.  Of course, for any questions related to Stamp Duty, specifically as it pertains to an existing estate or transfer of property between family members, it is recommended that you seek advice from a legal expert specialising in this field.  Welden & Coluccio Lawyers, the estate specialists, are equipped to assist you with any concerns relating to the application of Stamp Duty in a range of circumstances.