Real Estate

Calculating Stamp Duty – Western Australia

By July 24, 2017 No Comments

Female hand making calculations on calculatorWhen looking for an affordable home in beautiful Western Australia, you will not only want to focus on the home price but the key settlement costs that go along with it. One of the most important costs to factor in is called stamp duty. This is a tax levied by states in Australia on certain transactions, such as property settlements. Depending on your situation, your stamp duty could add several percentage points to the cost of your new home. On the other hand, you might be eligible for an exemption or a discounted rate. To get a good idea of where you stand, you can start with a stamp duty calculator. For a more detailed picture of how WA calculates stamp duty, have a look at our overview of the various rates and ranges below. However, for the most authoritative calculation, and to ensure you take advantage of any available exemptions and concessions, always contact a lawyer or home conveyancer to guide you.

Residential rates

If you’re buying a typical residential home in WA, and you’re not a first-time homebuyer, you will most likely pay one of five residential rates. These different rates depend on the dutiable value of the property, which is usually your home’s fair market value, or sale price, whichever is greater. Let’s have a quick look at the stamp duty formula, along with an example, for each range.

Up to $120,000

For homes in this range, the stamp duty runs $1.90 per $100. For example, a $90,000 property has nine hundred $100s in it. So we multiply 900 by $1.90 to arrive at a stamp duty payment of $1,710. This translates to 1.9% of the home value.

$120,001 – $150,000

For homes in this range, the stamp duty calculation is more complex: $2,280 plus $2.85 per $100 of the portion of the value above $120,000. For example, a $150,000 property is $30,000 more than the $120,000 threshold. $30,000 has three hundred $100s in it. So we multiply 300 by $2.85 to get $855.50, which we then add to $2,280 to arrive at a stamp duty total of $3,135. This translates to roughly 2.1% of the property value.

$150,001 – $360,000

At this point, stamp duty payments begin to represent a noticeably larger percentage of the property value. Payments for homes in this range are $3,135 plus $3.80 per $100 of the portion of the value above $150,000. For example, a $350,000 property is $200,000 more than the $150,000 threshold. $200,000 has two thousand $100s in it. So we multiply 2,000 by $3.80 to get $7,600, which we then add to $3,135 to arrive at a stamp duty payment of $10,735. This translates to roughly 3.1% of the home value.

$360,001 – $725,000

As we move into this range, stamp duty payments continue to represent a larger percentage of the property value. Payments for homes in this range run $11,115 plus $4.75 per $100 of the portion of the value above $360,000. For example, a $600,000 property is $240,000 greater than the $360,000 threshold. $240,000 has two thousand, four hundred $100s in it. So we multiply 2,400 by $4.75 to get $11,400, which we then add to $11,115 to arrive at a stamp duty of $22,515. This translates to roughly 3.8% of the property value.

$725,001 and up

For our final range, stamp duty payments are at their highest not only as a lump sum, but as a percentage of the property value. Payments for homes in this range run $28,453 plus $5.15 per $100 of the portion of the value above $725,000. For example, a $1,000,000 property is $275,000 greater than the $725,000 threshold. $275,000 has two-thousand, seven-hundred and fifty $100s in it. So we multiply 2,750 by $5.15 to get $15,162.50, which we then add to $28,453 to arrive at a stamp duty payment of $42,615.50. This translates to roughly 4.3% of the home value.

First-time homeowner rates

WA offers a $10,000 grant to eligible first-time homebuyers purchasing certain newly built homes. The $10,000 First Home Owner Grant (FHOG) received a temporary $5,000 boost to $15,000 at the end of 2016, but the boost expires for contracts entered into after June 30th, 2017.

Both buyers of newly built homes participating in the FHOG program and buyers of established homes (that would otherwise be eligible for FHOG had their property been newly built) may be eligible for a stamp duty exemption or discounted rate. If the property value is less than $430,000, there is no stamp duty. For home values greater than $430,000, but less than $530,000, eligible first-time homebuyers will pay a reduced stamp duty payment of $19 for every $100 above $430,000. For example, to calculate the stamp duty on a home valued at $500,000, we would first note that $500,000 is $70,000 greater than the $430,000 threshold. And $70,000 has seven hundred $100s in it. So we multiply 700 by $19 to arrive at a stamp duty payment of $13,300, or roughly 2.7% of the property value.

Keep in mind that FHOG and first-time homeowner rates are particularly complex subjects that may involve frequent changes by the state to eligibility requirements and concession calculations. To avoid any misinformation, always reach out to your lawyer or home conveyancer for the most up-to-date, authoritative information in these areas.

General rates

If you are buying commercial property, or rural property that you’re not also using as a residence, then this is the rate you will want to focus on.

$0 – $80,000

Rate: $1.90 per $100. For example, the stamp duty on a $75,000 property would run you $1,425 or 1.9% of the property value.

$80,001 – $100,000

Rate: $1,520 plus $2.85 per $100 above $80,000. For example, the stamp duty on a $100,000 property would run you $2,090 or roughly 2.1% of the property value.

$100,001 – $250,000

Rate: $2,090 plus $3.80 per $100 above $100,000. For example, the stamp duty on a $200,000 property would run you $5,890 or roughly 2.9% of the property value.

$250,001 – $500,000

Rate: $7,790 plus $4.75 per $100 above $250,000. For example, the stamp duty on a $400,000 property would run you $14,915 or roughly 3.7% of the property value.

$500,001 and above

Rate: $19,665 plus $5.15 per $100 above $500,000. For example, the stamp duty on a $700,000 property would run you $29,965 or roughly 4.3% of the property value.

Summing up stamp duty

When buying a home in Western Australia, stamp duty is one of the most important costs to factor into your total settlement payment. Depending on your situation, your stamp duty could range from zero to potentially tens of thousands of dollars. A typical $350,000 residential property in WA, for example, will run you $10,735 or roughly 3.1% of the home’s value. However, an eligible first-time homeowner would pay no stamp duty on that same property. In addition to making use of the rates and ranges above to find out where you stand, try a stamp duty calculator. Then reach out to a lawyer or home conveyancer to reassure you of the precise calculation, and to share the most up-to-date information on possible exemptions and concessions for you.

Titlexchange

Author Titlexchange

More posts by Titlexchange

Leave a Reply