Stamp Duty Explained
What is stamp duty? How much is it? What concessions or exemptions are available? How do I budget for stamp duty? HoLo answers all these questions and more.
If you’ve never bought property before, or if it’s been a few years, you may be wondering about stamp duty. In a nutshell, stamp duty is a tax. It’s not very exciting, but it’s one of those things that goes hand in hand with purchasing a property.
Navigating stamp duty can be tricky, so let’s break down what stamp duty is, how much it costs, recent changes and why you may well have to pay it.
What is Stamp Duty?
Stamp duty is a charge applied by state and territory governments to transactions relating to the transfer of land or property.
When you buy a property, stamp duty is usually paid upfront as a one-off fee, so it’s important to budget for it in addition to your loan deposit - what you borrow from the bank cannot be used to pay for it.
How much is Stamp Duty?
Stamp duty is calculated as a percentage of the property’s purchase price. However, the amount also depends on a few factors, such as which state or territory the property is in, the property type and the type of buyer you are.
For example, iIf you’re a first home buyer and meet certain requirements, you may be entitled to stamp duty concessions or exemptions on homes up to a certain value.
Examples of Stamp Duty by state/territory
Thankfully, there are a few online stamp duty calculators that can help take the guesswork out of budgeting for a property.
Using this calculator as an example, if you bought a $700,000 established home as a primary residence and you were not a first home buyer, you may expect to pay the following in stamp duty:
VIC - $38,911
SA - $38,626
NT - $34,954
TAS - $27,1005
NSW - $27,002
QLD - $19,668
ACT - $19,571
What concessions/exemptions are there?
Depending on the state or territory, there may be different concessions or exemptions available to certain types of buyers (particularly if you’re a first home buyer).
As an example, if you’re a first home buyer purchasing a home in Victoria for $600,000 or less, you may be entitled to a full stamp duty exemption. If the property is between $600,001 and $750,000, the stamp duty is tapered.
In NSW, the First Home Buyer Assistance scheme (FHBAS) allows first home buyers to receive a concessional rate on transfer duty (the NSW name for stamp duty) if they buy a home valued at between $800,000 and $1 million. Properties valued under $800,000 pay no transfer duty at all. The changes, which came into effect in July 2023, apply to both new and existing homes. Vacant land purchases have a different set of rules.
HoLo can help you find out more about the stamp duty concessions or exemptions in your state or territory. Schedule a call using the calendar below.
Budgeting for Stamp Duty
When creating your purchasing budget, it’s important to factor in how much stamp duty you’ll need to pay. Stamp duty can be costly, so it can really affect the type of property you may be able to afford.
Keep in mind that lenders may also want to see proof of savings to cover the stamp duty costs, in addition to your deposit, when you apply for a home loan.
Depending on your particular circumstances and type of purchase, it may be worth getting advice from an accountant or tax adviser about how stamp duty may affect you.
What does stamp duty go towards?
The stamp duty you pay is disbursed back into the economy by state and territory governments. It may go towards health, public transport, roads, police, justice and emergency services, for example.
Do you have to pay stamp duty on additional properties?
Yes, stamp duty is applicable to all property title transfers (unless you’re eligible for an exemption).
What if a home is gifted to you?
Even if a property is given to you, you will need to pay stamp duty, as ownership of the property is being transferred from one party to another.
There may be exemptions on stamp duty for properties that are inherited, but in this instance, inheritance tax may apply. Speak to your accountant or conveyancer for clarification.
Need more info?
If you need further help navigating stamp duty, please get in touch. As your broker, HoLo can help you create a purchasing budget and find a loan that works for you.
If you’d like to know more, book an appointment - it’s easy on your personal dashboard - or contact us.
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