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Stamp Duty Guide

Stamp Duty Guide

Stamp duty, is usually not something people give too much thought to, until they go to buy a home. For most people, they’ll be affected by stamp duty in the purchase of a car, or most noticeably in the purchase of some property.

 

It’s not normally something people think about too much, but of course, because of its significance particularly in the case a of real estate purchase, it is important to understand it better. For this reason, this guide will focus on stamp duty in real estate purchases.

This is a simple guide designed to give you the basics, the goal is not to turn you into a Stamp Duty Expert, rather, its focus is to give you a foundation understanding of:

 

- What it is

- How much it can cost

- How it works

- What your obligations are as the buyer

 

What is stamp duty?

Essentially, stamp duty is a tax paid to the State’s revenue office on the purchase of a range of items, such as cars, business assets and most notably, real estate. While for most purchases, it is included in as part of the total purchase cost, but in the purchase of real estate, it gets a bit more attention because of how significant it can be.

In the case of real estate, it is often paid by the buyer. How much they have to pay, and within what time-frame, varies state by state.

 

Stamp duty SNAPSHOT

What is it?

A one-off tax on the purchase of some items like real-estate, car, business assets

How much is it?

Varies greatly from state to state so be sure to check with your state’s revenue office.

How is calculated?

Most commonly calculated as a percentage of the purchase price, or market price, of the property

When will I have to pay this?

There is a timeframe within which you’ll need to pay it, and it too varies from state to state. For example in Victoria at the moment, you’ll need to pay the stamp-duty within 30 days of settlement. Whereas in the ACT, stamp duty is payable within 90 days after the signing of the contract.

Best way to manage it?

Factor the cost of stamp duty into your savings because in some lenders will require you to pay for it on top of having your 10-20% deposit.

Good starting points for state by state information

NSW - NSW Office of Revenue

VIC - State Revenue Office Victoria

QLD - Queensland Government, Treasury

ACT - ACT Revenue Office

SA - Revenue SA

WA - Department of Finance – State Revenue

TAS - State Revenue Office - TAS

NT - Northern Territory Revenue Office

 

How much is Stamp duty? How is it calculated?

Stamp duty on real estate purchases, can also be known as Transfer of Land duty, and how much you pay is dependent on the state in which you buy the property, and of course, the value of the property. In Victoria, for property sales today, the rate of duty is charged on a sliding scale, from 1.4% of the purchase price for properties valued at $25,000 or less, to a capped rate of 5.5% for properties valued at more than $960,0001. Please note also that there may a range of exemptions and concessions you might be entitled depending on the nature of the transaction, the use of the property and/or your personal circumstances. These may alter the amount of stamp duty you are required to pay. These also vary from state to state so ensure you check with your state’s revenue office.

 

The below table is just an estimate of what you would need to pay in stamp duty based on the median house price in each capital city as published by the Australian Bureau of Statistics (ABS), 2016. These are calculated using InfoChoice’s Stamp Duty calculator which is a free service, and then crossed referenced with the relevant state revenue’s office.

 

This is intended as a guide only, you can work out the stamp duty for your particular property using InfoChoice’s Stamp Duty calculator.

 

Stamp duty estimates for each Australian capital city

Based on median house price released by ABS, September 2016

Calculations are based state by state stamp duty rates as at January 2017

 

Sydney

Melbourne

Brisbane

Canberra

Adelaide

Perth

Hobart

Darwin

Median house price2

$882,000

$610,000

$499,000

$620,000

$437,500

$510,000

$360,000

$512,500

Stamp duty estimate

$35,180

$31,670*

$0**

$19,460

$18,205

$15,352*

$12,335

$1,019

Mortgage registration fee3

$136.30

$112.60

$175.00

$135.00

$157.00

$165.80

$130.81

$142.00

Transfer fee4

$136.30

$1,520.00

$1,231.00

$262.00

$3,349.00

$275.80

$200.43

$142.00

TOTAL

$32,887.60

$16,497.60

$1,373.00

$18,172.00

$21,586.00

$17,712.60

$12,526.24

$18,499.00

State Revenue Office

NSW Office of Revenue

State Revenue Office Victoria

QLD Government Treasury

ACT Revenue Office

Revenue SA

Department of Finance – State Revenue

State Revenue Office - TAS

Northern Territory Revenue Office

Special note:

*Based on First Home Buyer

** Based on First Home Buyer (established homes)

Other fees associated with stamp duty include the Mortgage Registration Fee and the Transfer fee; both of which are listed in the above table to give you a clearer idea of costs associated with stamp duty. Again, these will vary state by state, and in some cases, will also vary in accordance with property value.

The figures in this table are merely a guide to give you a basic indication of costs associated with stamp duty. Efforts to use the relevant state’s revenue office has been made wherever possible, in its absence, the InfoChoice Stamp Duty calculator has been used. The InfoChoice Stamp Duty calculator is free to the public and can help you work out a more complete picture of what you’ll be up for.

These figures are based on the following figures and assumptions:

The Australian Bureau of statistics median house prices by state

The stamp duty estimates are based on first home buyers.

The property is used as the principle place of residence (PPR)
No concessions or exemptions are taken into consideration

 

How it works...

It is paid to the relevant state revenue office and again it might vary by state. But usually, if you’re contracting a conveyancer to help oversee the buying transaction, they, and/or your bank, will organise it on your behalf by way of sending through a check.

 

Your obligations

As the buyer of real estate, you’ll need to pay the stamp duty. As for when you’ll need to pay, this too will vary state by state. Please check with your state revenue office.

 

Some friendly advice...

Do your research

It can make a big difference to your real-estate purchasing journey so understand it and get on top of it. Don’t let it become a nasty surprise.

Save for it

Depending on who your lending institution is, you need to come up with the cash to pay for this on top of your deposit. So be prepared and have it ready.

Factor it in

Buying real estate can be a daunting, not to mention expensive, task. Don’t just work on how much you can spend on the actual property, take all the costs associated with the purchase process into account when working out what you can honestly afford. It might mean you’ll have to spend less on the actual house, or save up for a little longer before you buy.

 

Calculate stamp duty now

1State Revenue Office, Victoria, viewed 9/1/2017: http://www.sro.vic.gov.au/land-transfer-duty

2Australian Bureau of Statistics (ABS), 6416.0 - Residential Property Price Indexes: Eight Capital Cities, Sept 2016

3InfoChoice Stamp Duty calculator, 2017

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