When it comes to purchasing properties, experienced homebuyers understand that the costs incurred are beyond mortgages and deposits. Legal obligations and associated paperwork are just as routine to property purchases. However, for first-time investors and homebuyers, navigating through legal fees can be daunting. One such big transaction for property buyers is stamp duty. Here’s a comprehensive guide to understanding stamp duty.
What is Stamp Duty?
Stamp Duty is a form of tax levied by Australian states against those who purchase property or land. In many state government websites, it’s interchangeably used with ‘transfer’ duty. It’s very important for investors to factor in the stamp duty cost to determine the affordability of the property. Stamp duty is, more often than not, a one-off payment and by budgeting for it at the very beginning an investor can avoid unnecessary stress.
How do I calculate it?
The amount of stamp duty paid by the buyer depends on the value of the property. Put simply, the higher the valuation of the property, the higher the stamp duty. Since it is a tax levied by the state government, the rates may differ in each state. To this end, most state government websites have online stamp duty calculators to help buyers determine the amount they need to pay.
When do I pay it?
Like rates, each state also has a different stipulated time period within which the payment for stamp duty must be made. In QLD and VIC, it is payable within 30 days of the settlement of the purchase. In ACT, the time period is 28 days, whereas, in SA, the stamp duty has to be paid on the day of the purchase. Where WA and NT have 2 months, NSW and TAS have as long as three months to make the payment.
How do I avail exemptions and concessions?
When a buyer is exempted from paying stamp duty, they can buy property without paying the entire fee. On the other hand, a concession offers a reduced price on the fee.
Most state governments offer either an exemption or a large concession to first-time home buyers, pensioners and/ or health cardholders. Exceptional circumstances such as the death of the property owner can also avail concessions. Where many concession or exemptions may not be applicable, buyers can check their eligibility under the First Home Owner Grant (FHOG), where homeowners receive a one-off grant by sponsored state.
Why is it collected and where does the money go?
The revenue collected via stamp duty helps the state pay for health services, road and transport, emergency and environment services, etc.
Since the rates and rules are different for each state, it’s best to research on state websites and stay updated on the latest developments. Click on your state to find out the regulations:
Wherever you are building it is always best to have all the information before you make a decision. At iBuildNew we can connect you with builders who will be able to meet your specific requirements. Book a call to get started.