Stamp duty is probably the biggest cost you’ll need to budget for when buying a house. Also called transfer duty, stamp duty is a tax on property by Australian state and territory governments, paid at settlement or shortly after, when ownership of a property is transferred.
The amount of stamp duty you’ll pay varies depending on the state in which the property is bought but in general the more expensive the house, the more you’ll pay in stamp duty. We take a look at how much stamp duty costs and the first home buyer exemptions or concessions that are available in most states.
Who has to pay stamp duty?
Most people will have to pay stamp duty tax when they buy a residential or investment property unless you’re a first home buyer or qualify for an exemption. Many subsequent home buyers forget about budgeting for stamp duty as they may not have had to pay it for their first home.
So it can be a nasty surprise and slightly stressful when you find out you have to pay stamp duty within 30 days of settlement. Stamp duty can be expensive, but on a positive note you do get to see the benefits of it. The money gets added to the state budget for things such as transport and roads, health and hospitals, emergency services, police and other essential services that help to keep the state running.
How much is stamp duty?
Knowing in advance how much you’ll need to pay for stamp duty can alleviate some of the stress come settlement day. It’s a good idea to jump online and use a stamp duty calculator to get a rough idea of how much you’ll be paying on a specific purchase price. For example, here’s what you’ll pay in NSW for different prices if you intend to live in the house and you’re not a first time home buyer: • An $250,000 home will cost you $7,240 in stamp duty • An $500,000 home will cost you $17,990 in stamp duty • An $800,000 home will cost you $31,490 in stamp duty As a general rule of thumb, you should budget for stamp duty to cost around 4% of the purchase price of the property.
Where is stamp duty the highest?
Recent CoreLogic figures showed that Victoria charged the highest amount of stamp duty in Australia. A $500,000 home in Victoria will cost you $21,970 in stamp duty if you’re not a first time buyer. So you can see why people want to get top dollar for their homes when selling, as they need to put a hefty chunk of the profit towards stamp duty!