So following on from my other home loan experiences (yes – I’m all moved in and nicely nested in my new home – thanks for asking) – I thought I would talk about stamp duty. Stamp duty was another small bump in my road to home ownership and unless you know about it it can come as an un-favourable additional expense.
Stamp Duty is a charge which is applied by state governments in Australia on transactions relating to the transfer of real estate, cars and other assets belonging to a business. It can also be imposed on home loans, gifts and some insurance. It is paid upfront and needs to be budgeted for in addition to your loan and deposit to avoid a nasty surprise come settlement time!
The amount of duty you will need to pay differs in each state, however there are three factors, along with the value of the property, that determine how much stamp duty you will pay.
- whether or not the property is a primary residence or investment property
- whether or not you are a first home buyer
- if you are purchasing an established home, a new home or vacant land.
There are a number of stamp duty calculators available online (or see below) that take the guesswork out of budgeting for a property. Factoring in this additional cost should not be overlooked when you are working out your capacity to repay a loan, it can however be added to your loan so you don’t have to come up with the additional funds.
However, in a bid by state governments to stimulate home ownership and growth, there are a range of tax concessions available to reduce stamp duty including concessions for pensioners, deceased estates, family farms, young farmers and off-the-plan sales. So make sure you do your research into any concessions you may be entitled to for your specific situation.
Again exact amounts differ across each state, but those who benefit the most are first home buyers and those opting to buy or build a brand new home.
If your lucky enough to be a first home owner buying in NSW you are exempt from stamp duty if your new home is valued under $550,000!
So why is stamp duty different state to state?
The Australian Federal Government doesn’t levy stamp duty, instead this is done by the state and territory governments. And to make it even more confusing, every state has a different levy.
However, it is generally based on the greater of two factors – the market value of the property or the price paid (including any GST) for the property. To work out stamp duty in your state or to compare state to state use the links below …..
- Australian Capital Territory
- New South Wales
- Northern Territory
- South Australia
- Western Australia
So put simply – stamp duty is a government tax that has to be paid – unless you fall into one of the categories that receive stamp duty concessions. It is worked out on a percentage of the property cost and varies from state to state. Confusing much??
For any further stamp duty info please don’t hesitate to contact myself (Bianca) at firstname.lastname@example.org or give Chris a call 0434 449 455