In terms of real estate, stamp duty (also known in Queensland, Tasmania and Western Australia as transfer duties) is a fee levied by state and territory governments for the purchase of a property. Interestingly the “stamp” was once a physical stamp, which was printed on the sale documents to prove that the real estate purchase was officially legal. Of course these days this practice has essentially morphed into a transaction fee that is paid when you buy property. Especially if you’re looking for a residential property investment, it is a good idea to find out as much as possible about these duties so you can factor them into your financial plan.
While each state and territory has different duties with different legislation, requirements and concessions, in general if you’re purchasing real estate you will pay duty based on either a percentage of the price paid (plus GST) or the market value of the property. There are marked differences between each state and territory in terms of the percentage and the cut off rates for duty, and it is worth doing your homework to find out exactly how much you may need to pay so you can factor this into the final purchase price. As an example, in NSW, if you buy a property worth between $300,000 and $1,000,000 you will have to pay $8,9990, plus $4.50 for every $100 or part, by which the dutiable value exceeds $300,000. In Victoria, however, if you buy a property valued at between $130,000 and $960,000 you will pay $2,870 and 6% of the dutiable value in excess of $130,000.[i]
There are certain concessions that also differ between the states and territories. In general these exemptions or concessions can apply to:
- Off the plan properties and new homes
- First home buyers
- Deceased estates
Again, taking NSW as an example, stamp duty concessions currently apply to first home buyers and new home or off the plan property, including full stamp duty exceptions on new homes valued up to $550,000. Partial exemptions are also available for new higher valued properties.[ii] The new home and off the plan concessions have provided a great incentive to people looking to make their budget go further, and for investors to maximise the return on their initial residential property investment.
Because stamp or transfer duties can be confusing, and the specific details of things such as concessions can often change in line with new state and territory legislation, it is a good idea to get the assistance of real estate professionals such as property agents in determining how much you will be ultimately have to pay when it comes to your purchase. You can also ask for help from your bank or other lender to calculate final costs, or use one of the many stamp or transfer duty calculators online. One of the best property investment tips if you are considering taking advantage off the stamp or transfer concessions on off the plan property is to seek the assistance of a professional property investment company.