2007 State Budget changes
The NSW Treasurer, The Hon. Michael Costa MLC, announced changes to mortgage duty as part of the 2007 Budget.
The changes announced bring forward the mortgage duty abolition date to 1 July 2009 and provide for 2 new exemptions from mortgage duty for mortgages that are associated with housing.
Both exemptions will be available only if the borrower under the mortgage or, if there is more than 1 borrower, each of the borrowers, is a natural person.
The first exemption, which took effect on and from 1 September 2007, is an exemption for mortgages that are made in connection with owner occupied housing.
Mortgage duty will not be chargeable in respect of a mortgage if the mortgage secures an advance or advances made, from 1 September 2007, for the purpose of owner occupied housing and no other advances. If the mortgage does secure an advance made for another purpose, mortgage duty will be chargeable in respect of that other advance.
An advance is made for the purpose of owner occupied housing if it is to be applied wholly or predominantly for one or more of the following purposes:
(a) financing the acquisition of a residence,
(b) financing the construction of a residence,
(c) financing alterations or additions to a residence,
(d) financing the acquisition of residential land,
(e) repaying another advance, if the advance to be repaid was made for the purpose of owner occupied housing.
A residence is defined as a private dwelling house that is used and occupied or intended to be used and occupied by the borrower, or by any of the borrowers, as a place of residence.
Stamping notation
Where the mortgagor is also a natural person, the mortgage can be registered without having to be stamped by Office of State Revenue.
Investment housing
The second exemption, which takes effect on and from 1 July 2008, is an exemption for mortgages that are made in connection with investment housing.
Mortgage duty will not be chargeable in respect of a mortgage if the mortgage secures an advance or advances made, from 1 July 2008, for the purpose of investment housing and no other advances. If the mortgage does secure an advance made for another purpose, mortgage duty will be chargeable in respect of that other advance.
An advance is made for the purpose of investment housing if it is to be applied wholly or predominantly for one or more of the following purposes:
(a) financing the acquisition of investment housing,
(b) financing the construction of investment housing,
(c) financing alterations or additions to investment housing,
(d) repaying another advance, if the advance to be repaid was made for the purpose of investment housing.
Investment housing is defined as any private dwelling house that is used, or is intended to be used or sold, for business or investment purposes (or both) by the borrower or by any of the borrowers.
For the purpose of the changes in 2007 and 2008 'Alterations or Additions' in relation to a private dwelling house include:
(a) any improvements to the parcel of land on which the dwelling house is constructed, and
(b) the maintenance, repair or renovation of the dwelling house or of an improvement referred to in paragraph (a).
