When buying property in Australia, one of the major up-front costs you’ll be required to pay is stamp duty. Depending on where you’re buying and what you’re buying, stamp duty will vary. Calculating stamp duty is often a cause for confusion amongst home buyers, with different rates for land purchases, concessions for first home buyers and sometimes a separate transfer cost to be paid. To help clear up any confusion, we’ve created a guide to understanding stamp duty.
What is stamp duty?
Stamp duty is a revenue levied by all Australian states on various transactions, including transfers and agreements for the sale of real estate, policies of insurance, mortgages, leasing, and the transfer and issue of motor vehicle licences.
Because stamp duty is levied against the value of the property you’re buying and varies from state to state, it’s a major up-front cost for many, particularly when you consider the sums involved in buying a home. It’s also a cause for confusion for many home buyers who struggle to work out how much they’ll be required to pay.
How is stamp duty calculated?
Calculating how much stamp duty you’ll be required to pay can be tricky. Each state approaches this charge differently, and there are various concessions for first home buyers, pensioners in some states, different rates if you’re buying land only or buying in a regional area.
A very basic explanation is that stamp duty is calculated using a sliding taxation scale depending on the property’s value. What that simply means is, the cheaper the property the lower the tax.
Who pays stamp duty?
If you’re buying property or land in Australia, you’ll need to pay stamp duty. Stamp duty must be paid when the property settles, so be sure to factor in these costs when budgeting.
There are some exemptions and concessions available – like first home buyers, off the plan, and pensioner concessions - but again these will vary from state to state.
For example, from 1 July 2017, first home buyers in New South Wales will benefit from stamp duty exemptions on new and existing homes worth up to $650,000, saving them up to $24,740. And stamp duty discounts will also apply for properties worth up to $800,000.
In Victoria, from 1 July 2017, first home buyers will be exempt from stamp duty when purchasing property up to the value of $600,000.
Who do I contact for more information?
Because the calculations can be so confusing, we’d suggest you contact your state revenue office or Mortgage Express broker for assistance, or use your state’s online calculator to help you determine how much you’ll need to pay, depending on your situation.
Links to Revenue Offices:
South Australia: www.revenuesa.sa.gov.au
Western Australia: www.dtf.wa.gov.au
Northern Territory: www.nt.gov
Don’t get caught out
Whether you’re a first home buyer or a seasoned investor, it’s important you understand and are aware of how much stamp duty you’ll be required to pay. Many buyers are caught out because they fail to include stamp duty in their budget when saving to buy a property. Talk to one of our mortgage brokers if you need assistance with your mortgage application.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
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