What Happens to Deferred Rates When You Sell or Pass Away in the ACT

The Three Repayment Triggers

Deferred rates in the ACT don't require repayment while you live in the home. The accumulated debt — principal plus simple interest — becomes due when one of three things happens:

1. You sell the property
2. You transfer the title (for example, gifting it to a family member)
3. You pass away

There are no scheduled repayments, no minimum annual payments, and no balloon date. The debt simply sits on the property title until a trigger event occurs.

Selling the Property

When you sell, the deferred rates balance is disclosed through a Certificate of Rates, Land Tax and Other Charges, which the buyer's conveyancer requests from the ACT Revenue Office ($148 in 2026/27). The certificate shows the exact total of outstanding deferred principal and accrued interest.

At settlement, the full amount is deducted from the sale proceeds before you receive anything. It works the same way a mortgage payoff does — the conveyancer or settlement agent handles the discharge as part of the transaction.

If you've deferred $2,000 per year for ten years at an average 4% simple interest, you're looking at roughly $24,400 coming off the proceeds. On a Canberra property worth $800,000 or more, that's a small fraction of the sale price. But it's worth knowing the number before you list.

What Happens at Death

When a sole property owner passes away, the deferral terminates immediately. The deferred balance becomes a liability of the deceased estate.

The estate executor (or administrator, if there's no will) is responsible for settling the debt. In practice, this usually happens one of two ways:

• The property is sold — the debt is cleared from sale proceeds at settlement, just like any other sale
• The property transfers to a beneficiary — the estate must pay out the deferred balance before or at the time of transfer, because the statutory charge needs to be discharged before clean title can pass

Death does not cancel the deferred balance. Sections 42 and 43 of the Rates Act 2004 give the Commissioner separate discretion to remit rates or interest in appropriate cases. The ACT Revenue Office treats the outstanding deferred rates as a first statutory charge on the land under section 55 of the Rates Act 2004 — it ranks ahead of commercial mortgages.

Joint Owners and Surviving Spouses

If the property is held under joint tenancy with a surviving spouse or partner, ownership passes automatically by right of survivorship. An eligible surviving owner can apply to continue the deferral in their name (either by holding a qualifying concession card or being 65+ with 75% equity); the deferral does not transfer automatically.

For tenants-in-common, the outcome depends on the deceased's will and the surviving co-owner's circumstances. The deceased's share doesn't pass automatically — it goes through the estate.

Moving to Aged Care

If you permanently move into a residential aged care facility, the property ceases to be your principal place of residence and the deferral determination ends. Ask the ACT Revenue Office how the outstanding balance must be handled before changing the property's use. If you rent out the home to fund aged care fees, the property also attracts land tax.

This is a common scenario where families need to plan ahead. Some pensioners sell the home to fund aged care accommodation deposits, clearing the deferred balance at settlement. Others transfer the title to a family member before entering care — but that also triggers repayment.

Planning for the Debt

Deferral converts a recurring expense into a lump-sum debt settled when the property changes hands. That trade-off works well for homeowners who need the cash flow now and whose property will eventually sell for enough to cover it easily.

Where it gets complicated is when family members expect to inherit the property debt-free, or when the estate has limited liquid assets to pay the balance without selling. Those are conversations worth having before the debt accumulates over many years.

The ACT Rates Rebate and Deferral Guide covers the estate settlement process in detail and includes a deferral interest projection so you can estimate the balance at different time horizons. For complex probate situations, free legal advice is available from Legal Aid ACT (1300 654 314) and Canberra Community Law.

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