Partitions of Land

Partitions

Section 29 Duties Act 1999

Description

Where two or more people hold dutiable ACT property together and they split the property between them, any person who ends up with a higher percentage of the property than he or she previously owned must pay duty on the increase under section 29 of the Duties Act 1999.

Where this section is usually used is where two (or more) developers hold a development lease, and intend to split the property into separate units which they will then divide between them.  When this happens they will end up with the same percentage of the property they had before, but divided into separate units.  As neither (or none, if more than two) gets an increase on the property he or she held previously, they do not have to pay duty, except for the $20 minimum (section 29 (4)).

Section 29

Section 29 applies where 2 or more parties hold property together (either as joint tenants or tenants in common) and they agree to transfer the property into the names of one them only (or, where there are more than 2 parties, to fewer people than there were previously).  Land that is not held jointly cannot be partitioned.

When they split the property, any party who ends up with more must pay duty on the increase in the property that he or she will possess.  This is because of the formula in section 29 (3) which provides that the dutiable value of a partition (DV) is to be determined as follows:

DV = A × (X÷Y)

where:

A means the sum of the amounts by which the unencumbered value of the property transferred or agreed to be transferred to a person exceeds the unencumbered value of the interest held by the person in that property immediately before the partition, or the sum of any consideration for the partition paid by any of the parties, whichever is the greater.

X means the unencumbered value of all dutiable property the subject of the partition.

Y means the unencumbered value of all property the subject of the partition.

Explained simply, the formula means that the dutiable value equals:

a.    the amount by which the value of the property transferred to a person exceeds the value of the interest held by him or
her immediately before partition; or
b.    the sum of any consideration for the partition paid by any of the parties, whichever is the greater.

This section does not require that the property to be split between the parties be only one block of land, or that parcels of land be next to each other.  Therefore, if multiple blocks are to be split between the parties, the value of the property for the purposes of the formula will be the aggregate of the value of the multiple blocks. 

Section 29 (2) provides that for the purpose of section 17 such a partition constitutes one transaction, so under section 17 if all the relevant documents are lodged at the same time duty can be paid on one document and all theother documents can be stamped for no extra fee.

Documents Required on Lodgement

Within 90 days of the liability arising, a completed Conveyance Lodgement Form and the executed Memorandum of Transfer must be lodged with the ACT Revenue Office.  Valuations of each property the subject of the partition must also be lodged and must be dated within 90 days of the liability arising.  A copy of the agreement for partition must also be lodged (the Deed of Partition or other document).