A partition agreement is an agreement that can be entered into by co-owners of a property (registered as tenants in common) for the purposes of partitioning ownership. The benefit of a transfer of land pursuant to a partition agreement is that it can attract nil or minimal stamp duty.
This means that where there is a property that is jointly owned, those registered proprietors can with their shares, after subdivision of that land, take real estate of proportionate value, free of duty. Please see our previous post ‘What is a partition agreement’ for more information regarding this.
In order to lodge a partition, a number of evidentiary documents must be provided. This includes all documents which outline any transfer of land as well as other documents relating to the transaction including:
The Parent Certificate of Title
The Title Plan
Plans of Subdivision, if applicable.
Any Partition Agreement made between the parties
A Statutory Declaration setting out the facts relating to the partition of the property between the parties.
The Certificate of Title to the relevant sub-divided lots (i.e Title to Lot 1 and Title to Lot 2)
Transfers of Land for each Lot
Value of the property must be provided by either:
A Letter of Appraisal from a licensed real estate agent and a copy of the rate notice; or
A valuation from a certified practicing valuer who is a member of the Australian Property Institution or of the Real Estate Institute of Victoria with sworn valuer accreditation.
Once these evidentiary documents have been provided to the office, they will be lodged with the Partition Agreement to the State Revenue Office.
Whilst such arrangements can have the advantage of reducing stamp duty, recent taxation decisions indicate that Partition arrangements may attract GST and Capital Gains Tax. We do not provide advice surrounding complex tax issues and thus require all clients to obtain the advice of their professional tax advisor before committing to such an agreement.
Need advice on a partition agreement?
ASAP Lawyers regularly accept instructions to draft and advise on partition agreements. Contact us on 03 9450 9400 to make an appointment for a consultation.