Stop! Before you buy your property, make sure you remember to consider the additional cost of stamp duty and its effects on your property budget. Particularly for investors or those buying interstate, stamp duty may be an unwelcome surprise if left unconsidered.
Stamp duty is a tax imposed by state governments in Australia in relation to the transfer of land and property. It is paid within 30 days of the property settlement and invested into the state’s economy. Each state in Australia provides a unique scale of charges, however, all are based on the market value of the property or the purchase price, depending on which is of greater value. Therefore, the cheaper the property, the less tax owed.
Each state is designed to make it easier for people to enter the property market, however, due to the considerable differences between states, it can be quite confusing. For example, as a property in VIC may incur a stamp duty of $23,000, a property of the same price in QLD may only incur a $9,000 stamp duty. VIC and the NT are highlighted as the most expensive duties payable, with QLD and NSW as the most generous.
Is there any way to gain a concession or exemption? Although each state differs, there are various concessions, particularly protecting primary residential properties and those entering the property market:
– Principal Place of Residence Concession: If the property you have purchased is intended as your primary place of residence, and you intend to move in within twelve months of settlement, you may be eligible for a reduced charge. However, if the property you purchase exceeds a certain charge you may not be granted this concession. For example, in VIC the concession is only allowed for properties valued up to $600,000.
– First Home Owner’s Grant: In general, the states aim to reduce the stress of entering the property market and offer various methods of cost reduction. For example, a NSW home valued up to $550,000 will receive a full exemption and a property with a value up to $650,000 receiving a concession. Alternatively, the NT offers up to $25,000 for any home bought in a regional area or a new home in an urban area, as well as a concession of $12,000 for an established home in an urban area for a property valued up to $600,000. With some states only offering this grant to newly built properties, or houses undergoing their first sale, be careful to check your individual state’s grant before purchase.
– Pensioner Concession: Pensioners may be eligible for a reduced duty tax, ensure you refer to your state’s policy.
– Transfer of property to spouse or domestic partner: When transferring a property to someone you are legally married to, or in a genuine domestic relationship, a full exemption from stamp duty applies. However, it is important to recognise that stamp duty will still occur when transferring to other family members such as a sibling or from parents to children.
Due to the extensive and confusing differences between states, and whether or not you are purchasing a property or land, be sure to utilise an online calculator to specifically find out the applicable stamp duty for your purchase. Check your stamp duty here: http://stampduty.calculatorsaustralia.com.au/ and remember to consider this additional cost before you buy a nice new couch because you thought it fit into your budget.