Stamp duty explained

Stamp duty explained

Buying a property can be an exciting and stressful time, with many things to consider. One of these is stamp duty, a tax that applies to most property purchases in Australia and is typically one of your largest upfront costs.?

What’s stamp duty and when do you have to pay it?

Stamp duty is a tax that is charged by state and territory governments in Australia when you purchase or transfer certain types of property or assets, such as real estate, shares or motor vehicles. Stamp duty is payable when you enter into a legally binding contract to purchase the property, which means that it is paid at the time of settlement.

How much is stamp duty?

The cost of stamp duty varies depending on a range of factors, including:

• The value of the property: the higher the value, the more stamp duty you will pay.
• The type of property: different rates apply to residential and commercial properties as well as vacant land.??
• The location of the property: each state and territory has its own stamp duty rates and rules. More on this below.
• Whether you’re a first-time buyer: Some states offer exemptions or concessions for first home buyers.
• Whether you plan to live in the property: Some states offer different rates for owner-occupiers and investors.

A state-by-state guide

As mentioned above, stamp duty rates and rules differ depending on where the property is located.?

So here’s a guide on how much stamp duty should be paid in each state and territory as of April 2023. The guide also includes a breakdown of first home buyer exemptions.

New South Wales

During the 2022-23 financial year, NSW first home buyers are eligible for exemptions or discounts on stamp duty if the value of the property is below $800,000:

• A full exemption is available for properties below $650,000
• A partial exemption is available for properties between $650,000 and $800,000

First home buyers can also choose to opt out of stamp duty altogether in favour of an annual property tax when buying homes valued up to $1.5 million. This is known as the First Home Buyer Choice.?

However, this is all set to change in the 2023-24 financial year, following NSW Labor’s win in the 2022 state election. During the election campaign, Labor promised to:

• Abolish stamp duty for first-home buyers on properties valued up to $800,000
• Offer discounted rates on properties purchased for up to $1 million
• Repeal the First Home Buyer Choice?

Victoria?

In Victoria, stamp duty is known as land transfer duty. Eligible first home buyers don’t pay land transfer duty when buying a property for $600,000 or less with a partial exemption available for homes between $600,000 and $750,000.

Queensland

First home buyers may be eligible for a full exemption or concession when buying a home valued at less than $550,000.

ACT?

In the ACT, stamp duty is known as conveyance duty.?

As of September 2022, the ACT government uses two different sliding scales for residential transactions depending on whether it is an eligible owner-occupied transaction or not.?

Eligible owner-occupied transactions have a cheaper duty rate. To qualify, at least one buyer must live in the home continuously for at least one year and take up residence within 12 months of the settlement date.

As a general rule, if you are buying as an investor you will have to pay a slightly higher duty rate, as per the below table.?

Unlike other states and territories, you don’t need to be a first home buyer to be eligible for ACT’s exemption and concessions schemes. Rather, ACT’s Home Buyer Concession Scheme is income-tested, with applicants also needing to:

• Not own a property in the previous two years
• Reside in the property for a continuous period of six months in the first year of owning the property

The table below shows the total gross income threshold for all home buyers.

Separately, the ACT offers a stamp duty exemption when you buy off-the-plan units and townhouses valued at or below $600,000.

Western Australia?

Eligible first home buyers in Western Australia pay no stamp duty when buying a home for less than $430,000. They receive a discounted rate when buying a property valued between $431,000 – $530,000.

The standard rates of stamp duty are:

South Australia?

South Australia currently offers no stamp duty concessions or exemptions for first home buyers. The stamp duty tiers are:

Northern Territory?

In the Northern Territory, the standard rates of stamp duty are:

The Northern Territory currently offers no stamp duty concessions or exemptions for first home buyers.

However, you may qualify for a full stamp duty exemption when buying a house and land package. This is known as the House and Land Package Exemption (HLPE).

To be eligible, you must:

• Buy a house and land package from a building contractor
• Sign the contract between 1 July 2022 and 30 June 2027

Under the contract, the building contractor agrees to sell land to the purchaser and do one of the following:

• Build or place a detached, new home on the land being conveyed
• Complete the building of a partially completed and detached new home on the land being conveyed
• Transfer ownership of a completed and detached new home on the land being conveyed.

The building contractor must have bought the land from a developer and paid stamp duty on the dutiable value of the land.

The exemption is not means-tested and there is no cap on the value of the property.

Tasmania?

Tasmania’s stamp duty tiers are:

First home buyers can get a 50% discount on stamp duty when buying a home for $600 000 or less.?

How to estimate stamp duty?

The cost of stamp duty can be a significant expense for homebuyers, so it's important to factor it into your budget. To estimate how much stamp duty you'll have to pay, you can use an online stamp duty calculator or consult a real estate agent or conveyancer. These professionals can provide you with an estimate based on the purchase price of the property and the location.

Can stamp duty be added to a mortgage?

Stamp duty cannot be added to a mortgage as it is a separate expense that must be paid upfront. This means that you need to have the funds available to cover the cost of stamp duty when buying a property.?

Looking to buy a high-quality investment property? Auswide Buyer’s Agency can help. To discuss your options, book a free consultation with Ashish Malhotra.