The move aims to free up crucial housing stock for growing families.
The total stamp duty abolition would apply to people aged 60 or over buying a smaller, newly built home or off-the-plan apartment worth up to $2 million, saving eligible South Australians up to $103,830.
The exemption can only be accessed once.
Premier Peter Malinauskas announced the election pledge on Sunday morning, saying if his party was re-elected the plan would stimulate housing growth and help free up larger homes for families.
Under the scheme, people purchasing a $1 million home, having sold their larger home, would receive a full stamp duty concession worth $48,830. That would increase to $76,330 for a $1.5 million home, while a maximum concession of $103,830 would apply for a $2 million home.
The announcement comes a day after the government officially entered caretaker mode, with Mr Malinauskas and his deputy Kyam Maher visiting Government House on Saturday morning to formally start the state election campaign.
"Our plan to abolish stamp duty for downsizers is specifically calibrated to increase housing supply, while also freeing up larger homes for families," Mr Malinauskas said on Sunday.
"By abolishing stamp duty, we are offering a real incentive to older South Australians to downsize ... Under our plan, seniors can save more than $100,000, compared with $15,000 under the Liberals."
Liberal leader Ashton Hurn used her party's election campaign launch to announce a policy for over-55 downsizers to receive the one-off stamp duty concession of $15,000.
Under the plan, older South Australians moving out of their home would pay less stamp duty when moving into a lesser-value home, with a cap on the concession on properties priced above $1.2m.
Federal Liberal frontbencher James Paterson conceded the upcoming South Australian election would be tough for his party.
"The polling coming out of South Australia is very dire, and it's understandable on some levels, given the circumstances, given the issues with previous opposition leaders at the state level in South Australia," Mr Paterson said.
"Premier Malinauskas is one of the most popular state leaders in our country, but I've got to pay immense credit and respect to Ashton Hurn for the way in which she has stood up in the most difficult circumstances."
The South Australian election will be held on Saturday March 21.
Who can receive stamp duty relief under Labor's policy?
* Applicants must be 60 or older
* Be purchasing a new or off-the-plan dwelling to live in
* Sell their existing principal place of residence
* Be purchasing a property valued at up to $2 million, with a land or apartment size smaller than their existing principal place of residence
Source: South Australian Labor Party
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