Stamp Duty: A Comprehensive Guide

When purchasing a property, there are many additional costs to consider on top of the agreed price. The biggest of these additional upfront costs is stamp duty, known in some states as land transfer duty. The cost of stamp duty will need to factored in when you apply for your home or investment loan and, be warned, we’re not talking a few hundred dollars here but a sum in the thousands.

A state government tax based on a percentage of the purchase price of the property, stamp duty covers the cost of changing the title of the property you are purchasing, and the ownership details.

How much is stamp duty?

How much you will pay in stamp duty depends on the state or territory you are buying the property in, the amount you are paying for the home and the type of property you are buying.

If you are a first home buyer, you may be eligible for stamp duty exemption or concessions, but again this will vary from state to state. Pensioners and health card holders may also be eligible for concessions or stamp duty exemption in some states.

Below are links to stamp or land transfer duty online calculators for each state and territory. Explore the site relevant to your property purchase for details of any first homeowner grants or stamp duty concessions you may be eligible to receive. You don’t want to miss out on what could be a considerable saving!

·         Australian Capital Territory

·         New South Wales

·         Northern Territory

·         Queensland

·         South Australia

·         Tasmania

·         Victoria

·         Western Australia

Legally, you will be required to pay stamp duty within 30 days to three months of settlement, again depending on the state or territory, on the property you are purchasing.

How stamp duty is calculated

In general, stamp duty will be calculated on the price you are paying for the property or the market value of the property, whichever is greater.  This means that if you are paying $550,000 for the property, but its market value is calculated as only $500,000 then you will pay stamp duty on the higher amount of $550,000.

How to minimise stamp duty

If the market value of your intended property purchase is calculated as lower than the price you have agreed with the vendor, you may be able to negotiate a lower price for the property based on this, thereby lowering your purchase price and the amount of stamp duty you need to pay.

If you are building a new home, it could be worthwhile to lower your building costs (by choosing cheaper finishes and fixtures, for example) in order to save on stamp duty.

Another option to consider, especially if you are investing in property or willing to relocate, is to purchase your property in a state with lower stamp duty or stamp duty exemption for first home buyers.

It’s also worth visiting the above websites to see what the stamp duty thresholds are like in your state. For example, in most states homes worth more than $500,000 attract considerably higher stamp duty than properties below this threshold. If this is the case, you could consider only looking at properties below this threshold.

As you can see, researching stamp duty carefully before you go ahead and purchase a property is definitely a worthwhile exercise that could save you thousands of dollars. Even if you don’t save money, you will be prepared prior to searching for a property for this major additional cost.

If you have any further questions regarding stamp duty or land transfer duty, stamp duty on houses you are considering for purchase or stamp duty exemption, don’t hesitate to consult with your local Century 21 real estate agent for an expert opinion.

Posted by Administrator on 09/02/2017 at 9:19 AM | Categories:


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