What is stamp duty?

What is stamp duty?

There are a number of upfront costs involved in buying a property such as mortgage registration, solicitor’s fees, building and pest inspections, home insurance, and removalist costs.  Of these, stamp duty is arguably the least well understood. The exact amount depends on a range of factors such as the property’s location and value, but usually comes in at approximately 3 to 4% of the purchase price. It’s technically called ‘transfer duty’ these days but just about everyone still refers to it by its original name, which dates back to when a physical stamp was required as proof of payment.

• Calculate your upfront costs with our online calculator

How is stamp duty calculated?

Stamp duty is calculated by a range of factors. Generally speaking, these are:

• The property’s purchase price or value.
• The type of purchase (i.e., new, existing or land).
• Whether you intend to make it your primary residence.
• Whether or not you’re a first-time buyer.
• Your state and territory.
• Whether you're eligible for any concessions or exemptions.

Are the rules for stamp duty the same in all Australian states?

If only it were that simple! No, the rules for stamp duty vary by state and territory. While it’s always best to consult the relevant state website for definitive and up-to-date information, you can get a good idea of how much you might be required to pay with our stamp duty calculator.

Are first home buyers exempt from stamp duty?

Most states offer exemptions or concessions for first homebuyers, depending on the price of the property in question. To see how much you could save, check the ‘I am a first homebuyer’ box on our stamp duty calculator.

Alternatively, you can find this information on the relevant state website.

When do I have to pay stamp duty?

States don’t just have their own rules for how stamp duty is calculated, they also have different timeframes for when it needs to be paid. These are:

• QLD – within 30 days of settlement.
• NSW – within three months of signing a contract for sale or transfer.
• VIC – within 30 days of settlement of your new purchase.
• TAS – within three months of the transfer of the property.
• ACT - after settlement and within 14 days after your title is registered with the state title registry (Access Canberra), you will also receive a Notice of Assessment that confirms the registration.
• NT – within 60 days of signing the purchase contract.
• SA – at settlement
• WA – one month after you lodge the stamp duty documents for your purchase.

Is stamp duty being abolished?

Residents of New South Wales who consider stamp duty to be outdated and unfair will be pleased to hear that reform is on the horizon.

Earlier this year, the New South Wales government announced the introduction of an annual property tax option for first-home buyers which will be available for homes of up to $1.5m in value. According to reports, eligible first homebuyers will be able to apply from 16 January 2023 and can expect to pay $400 per year, plus 0.3% of the land value of the property.

Not everyone is enthusiastic about the new proposal though, with Shadow Treasurer Daniel Mookhey describing it as, “an annual land tax that will last forever."

Is stamp duty tax deductible?

Sadly not. On the upside, if you're buying an investment property, the ATO considers stamp duty as a cost of buying a property. This can help you reduce any capital gains tax paid if you sell the property for a profit.

If you’re buying an investment property, many of your rental property expenses such as advertising for tenants, maintenance, repairs, and insurance can be claimed on tax. Check with your accountant or a tax professional for more information.