10 Things About Stamp Duty You Probably Want to Know

It’s a substantial cost on top of your deposit and mortgage, so it’s no surprise that stamp duty generates plenty of questions from property buyers. We’ve put together this Q&A to explain how much stamp duty you’ll pay depending on where you live in Australia, plus lots of other interesting facts.

1.How much is stamp duty?

The final figure depends on variables like the Australian state or territory you live in, the value of the property, and whether you plan to use it as an investment. Use the Yellow Brick Road Stamp Duty Calculator to get a basic estimate of what you might have to pay.

In NSW the stamp duty estimate is $35,932 on a $900,000 primary residence property, whereas a similarly priced property in Victoria attracts around $49,070 stamp duty.

Generally, the cheaper the property, the lower the duty. For example, a $400,000 home in South Australia demands around $21,330 duty, compared to $43,330 for a $900,000 home.

2.How is stamp duty calculated?

The way that stamp duty is calculated varies across states, but often a sliding scale is used. This means the percentage rate changes depending on which threshold the ‘property value’ falls into. Property value refers to the property’s sale price or its current market value, whichever is higher.

3.Do first-time home buyers pay stamp duty?

As a first home buyer, you should budget for stamp duty in your list of costs. However, depending on where you live in Australia, first-time buyers may be eligible for stamp duty exemptions or concessions. Criteria usually include whether the property or land is valued under a certain amount and if you’re buying vacant land.

Your Yellow Brick Road mortgage broker or Office of State Revenue can give you the specifics for your situation.

4.Why is stamp duty paid?

Not restricted to home-buying, this government tax is imposed on transactions like motor vehicle registrations and hire purchase agreements to cover the cost of changing the title and ownership details.

5.When does stamp duty have to be paid?

It’s a one-off payment, with a due date that varies state by state. For example, in NSW it’s payable within three months of settlement, whereas in South Australia it’s payable on settlement day.

This is one bill you want to pay on time because late payments incur additional penalty rates and interest charges. 

6.Can stamp duty be paid through the mortgage?

Stamp duty can be added to the principal of the loan, with interest charged. This option usually is only available to borrowers who meet certain conditions like a Loan to Value Ratio (LVR) of 85% or less.

7.Is stamp duty payable on a second home?

No matter how many homes you buy and sell, it’s hard to avoid stamp duty. There’s a good chance you’ll have to pay it even when refinancing.

It pays to find out in advance from your YBR mortgage broker how much you should budget for in stamp duty when refinancing. If increasing your loan size, there may be an opportunity to receive a refund on the portion of stamp duty that relates to the existing loan. Better still, you might be able to side-step stamp duty by refinancing with the same lender, using the same borrower name, and the same loan amount.

8.Is stamp duty payable on a gifted or transferred property?

Property title is sometimes transferred between family members for tax or inheritance reasons, and to protect assets. Parents might even gift property to their children for no payment. In all these instances, stamp duty applies.

It’s worth checking out what concessions and exemptions might be available in your state for property transfer. For example, if the property is transferred due to a marriage breakup or you’re a deceased estate beneficiary.

9.Who is eligible for a stamp duty exemption?

If you’re a first home buyer purchasing a cheap property, you may be exempt from stamp duty. In certain situations, exemptions may also apply if you’re transferring ownership to a spouse so both partners can hold it. Alternatively, to an ex-partner in the event of a marriage split.

Possible concessions apply for pensioners, seniors and carers, deceased estates and property purchased off-plan. Your Office of State Revenue has the details of the thresholds, exemption and concessions that apply in your state.

10.Are stamp duty rates likely to change?

Several states made recent changes to stamp duty. In NSW, for example, as of 1 July 2019, stamp duty will be indexed to inflation. So each stamp duty price bracket will now move in line with the consumer price index. In the ACT, stamp duty was removed from eligible home buyers, such as those who have a household income lower than $160,000.

Significant changes have also occurred in Victoria and Western Australia, so be sure to ask your YBR mortgage broker for an update.

*The information presented herein, may involve views, estimates, assumptions, facts and information from other sources that are believed to be accurate and reliable as of the date this information is presented—any of which may change without notice.

**The information on this article does not take into account your personal objectives, financial situation or needs. If you require further information don’t hesitate to contact the branch directly.