Tens of thousands of dollars in stamp duty is keeping growing numbers of older Australians stuck in family homes they no longer need, with financial penalties for moving proving too steep for many who would otherwise choose to downsize into something smaller and more manageable.

Michael and Leisa McLennan are a case in point. After 14 years in a five-bedroom suburban home — complete with a pool — the Queensland couple are almost empty nesters, with two adult children already gone and a third soon to follow. They want to move into a smaller property that demands less upkeep, but the prospect of paying tens of thousands of dollars in stamp duty has become a "significant concern" that could ultimately keep them exactly where they are.

"Instead of giving that money to government, we could buy ourselves a new car, we could have multiple overseas holidays, or we could renovate the house," Michael McLennan said. "It doesn't feel right that there are effectively significant financial penalties for someone such as us to move out of a five-bedroom house to move into, say, a three-bedroom apartment."

The couple also flagged anxiety about committing to apartment or townhouse living for the first time, worried about paying stamp duty and associated costs only to find the lifestyle doesn't suit them — and then facing the same financial hurdle all over again if they need to move on.

How Much Does Stamp Duty Actually Cost?

The financial impost of stamp duty varies considerably depending on where in Australia a property is purchased. On a home valued at one million dollars, the tax can range from around $30,000 to more than $50,000 in some jurisdictions — a significant sum for anyone, but particularly for those on fixed incomes such as the age pension.

Brendon Radford, director of policy and research at National Seniors Australia, says repeated surveys over many years have consistently identified the cost of moving as one of the single biggest barriers for people who want to downsize. Beyond stamp duty, legal fees and other transaction costs compound the problem, making the entire exercise financially daunting for older Australians living on limited incomes.

Offering a "modest" stamp duty concession for seniors has long been a priority for National Seniors Australia, according to Dr Radford, who added that many older people are also deterred by the prospect of having to leave the communities and neighbourhoods they have built their lives around.

A Patchwork of State Policies — With Big Gaps

The policy landscape across Australia remains fragmented. South Australia has announced stamp duty exemptions for people aged over 60 who purchase newly built homes. Victoria and the ACT are the only jurisdictions currently offering stamp duty concessions specifically for pensioners. In Queensland — where the McLennans live — the state government has indicated no such measures are under consideration.

Queensland Treasurer David Janetzki said the government's focus remained on eliminating stamp duty for first home buyers purchasing new builds, alongside other home ownership support programs.

At the national level, some economists and even the federal housing minister have publicly labelled stamp duty a poorly designed tax and called for it to be phased out. However, state governments rely heavily on the revenue it generates — income that has grown substantially alongside rising property prices — making wholesale reform politically difficult.

The Downsizing Dilemma Goes Beyond Cost

Urban planning expert Rachel Gallagher pointed to another layer of the problem: a lack of diversity in suburban housing stock. Even when older Australians are financially willing to move, there is often a shortage of suitable smaller homes in the neighbourhoods they want to stay in, limiting their choices and further discouraging a move.

For the McLennans, stamp duty concessions could be the deciding factor. They argue that encouraging downsizers with targeted financial relief would have a flow-on benefit for the broader housing market, freeing up larger family homes for younger households who need the space — a dynamic with clear implications for Australians living longer and navigating changing health and lifestyle needs as they age.

Until meaningful reform arrives, couples like the McLennans face a stark choice: pay up, or stay put.