Buying a home is one of the most rewarding, but also overwhelming, experiences in modern life. One of the issues that can take homebuyers by surprise is a substantial state tax on home sales in Australia called a “stamp duty.” Most homebuyers will have to make room for this payment when calculating what they can afford. However, the basic stamp duty payment varies enormously from state to state. Whether or not you’re a first-time homebuyer, or a pensioner, can also make a big difference. In many states, there are stamp duty concessions, and in some cases exemptions, for first-time homebuyers and pensioners that meet certain conditions. State-by-state summaries, such as those below, and stamp duty calculators, can give you a rough initial idea of where you stand. However, you will eventually want to meet with a conveyancer to make sure you have an accurate stamp duty estimate, and that you’re taking advantage of any potential adjustments in your favour.
Calculating stamp duty
When estimating your expected stamp duty payment, you can begin by asking yourself a few key questions:
- Are you buying the property as a residence or an investment?
- Is the property an established home, a new home or vacant land?
- What state or territory is the property located in?
- What’s the sale price of the property?
- Are you an Australian resident or a foreign buyer?
- Are you a first-time homebuyer?
For a first approximation of your stamp duty payment, you can plug your answers into a stamp duty calculator. If you would prefer a more in-depth overview, you can also browse the state-by-state summaries below. To keep it simple, these summaries generally assume that you’re buying an established home that you will reside in, and that you are an Australian resident. Also, please keep in mind that as home prices continue to increase in Australia, some state governments have begun taking steps to change their approach to state duty payments. Therefore, these summaries may not accurately reflect the very-latest changes in your state. For a complete, detailed, up-to-date estimate, you will always want to consult with your conveyancer.
Australian Capital Territory
There are three different stamp duty payment formulas in ACT, each corresponding to a separate price range:
- For properties valued at $200,000 and below, the duty is $1.48 per $100 or $20, whichever is greater.
- For properties valued between $200,000 and $1,455,000, the duty per $100 gradually increases with the property price.
- For properties valued at $1,455,000 and above, the stamp duty is $5.09 per $100.
However, if you are a first-time homebuyer or a pensioner, and you meet certain requirements relating to each, you can take advantage of special concession rates that will lower your payment considerably.
New South Wales
The stamp duty in NSW is complex, and the type of calculation depends on which one of seven different price ranges your property falls into. However, for a typical home valued between $300,001 and $1 million, the stamp duty comes to $8,990 plus $4.50 for every $100 in excess of $300,000.
The state government in NSW recently passed a housing affordability package designed to dramatically decrease the stamp duty burden for first-time homebuyers. As of July 1st, 2017, first-time homebuyers in NSW will pay no stamp duty for new and established homes priced $650,000 or less, and will pay a discounted stamp duty for new and established homes priced greater than $650,000, but less than $800,000.
Unfortunately, the basic calculation for the stamp duty payment in the Northern Territory is about as complex as it gets, at least for properties with a dutiable value of $525,000 or less. Feel free to zoom past this part if it makes your eyes gloss over. But if you really want to dig into the numbers, here they are:
- Start with the property value.
- Divide by 1000. Call this “V”.
- Multiply V by 2.
- Multiply the result by 0.06571441.
- Add 15 times V to the total.
Got it? Don’t worry if you don’t. This is why it’s always smart to reach out to a conveyancer to navigate these complex calculations.
Now, for homes with a dutiable value greater than $525,000, but less than $3 million, the calculation is much simpler. It’s just 4.95% of the dutiable value. If the value is greater than $3 million, it’s 5.45%.
First-time homebuyers that are not otherwise eligible for a First Home Owners Grant (FHOG) or a Senior, Pensioner, and Carer Concession (SPCC), can take advantage of a concession of as much as $7,000.
Pensioners can take advantage of the SPCC.
For properties valued below $5,000, there’s no stamp duty payment in Queensland. Otherwise, it gets complex, and might be more confusing than helpful to go through all the formulas for all the price ranges here. So let’s just look at one typical range. For a home priced between $75,000 and $540,000, the formula is $1,050 plus $3.50 for every $100, or fractional remainder of $100, above $75,000.
Although Queensland does not offer concessions for pensioners, there is a concession for first-time homebuyers, as long as the property value falls below $550,000.
The formula for calculating the stamp duty in Tasmania depends on the home price. For a home with a price between $200,000 and $375,000, the formula is $5,935 + $4 for every $100, or fractional remainder of $100, of the portion of the price that lies above $200,000.
As of the time of this writing, Tasmania does not offer stamp duty concessions to first-time homebuyers and pensioners.
Unfortunately, there is no quick formula to calculate stamp duty in Victoria. Rather, it follows a stepped, sliding scale that increases with price. The lowest rate is for properties with values of $25,000 or less and is 1.4%. The highest rate is for properties with values greater than $960,000 and is 5.5%.
However, many first-time homebuyers in Victoria don’t have to worry about these calculations. If the property they’re buying is valued at less than $600,000, they will pay no stamp duty whatsoever. Victoria also offers a concession on the stamp duty if the home price is greater than $600,000, but less than $750,000.
The stamp duty in WA is a flat rate of 1.9% for properties with dutiable values less than $120,000. From that point, the stamp duty increases in steps, maxing out at $28,435 plus 5.15% of any portion of the value above $725,000.
At this time, Western Australia does not offer first-time homebuyer exemptions or concessions.
Coming to grips with the stamp duty
Buying a home is hard enough without having to master all the intricacies of calculating your stamp duty. However, it’s important to come to grips with this payment as early in the process as you can, and learn how it will factor into what you can afford. One of the first discoveries you’ll make is that the stamp duty payment various enormously from state to state. You’ll also notice that in most states you can dramatically decrease, and in some cases even eliminate, the stamp duty if you are a first-time homebuyer or a pensioner that meets certain conditions. To find out where you stand, you can start with the state-by-state summaries above, along with a stamp duty calculator. However, always meet with a conveyancer to get the most up-to-date, accurate stamp duty estimate for your next home.