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Stamp duty is part and parcel of buying property in Australia. But it’s also a tax that few buyers understand.
Stamp duty refers to the tax you pay on certain transactions and documents. One of these transactions where you need to pay stamp duty is when you purchase a property.
Naturally when someone is thinking of buying a property, there are a lot of questions around stamp duty and we have made a list of the top questions below and spoke to Lachlan Walker, from Brisbane’s Place Estate Agents, to have these questions answered .
Stamp duty is a form of tax. It is applied to a number of transactions, including transfers of property, mortgages and motor vehicle registrations.
“It can also be imposed on some insurance and gifts,” Walker explains. “The transaction is charged, with the amount based on the greater of the market value of the property or the price paid, including any GST. This means, the more expensive the property, the higher the stamp duty.”
For new investors or those buying interstate, Walker says stamp duty can “slide under the radar” and become a nasty surprise when it’s time to pay.
“If you are thinking about entering the property market, don’t forget to factor stamp duty into your budget,” he says. “If you work out how much needs to be paid from the offset, you could save yourself a lot of stress in the long run.”
In real estate, the buyer pays the stamp duty.
Stamp duty is decided by separate state and territory governments, rather than the federal government, so rates vary.
“Working out the amount you have to pay can become confusing due to the different approaches by each state,” Walker says.
It’s also important to note that some states offer concessions to first-time buyers. And that rates also vary for those buying land.
Use our Stamp Duty calculator to work out how much you might need to pay.
Just as the stamp duty rate varies from state to state, so does the timeframe in which people need to pay it.
If you fail to pay within the given timeframe, you will have to pay additional penalty rates and interest.
State governments offer stamp duty exemptions when property changes hands following a death or divorce, or is transferred between family members.
And most state governments also offer first-home buyers either a complete exemption or a large concession.
For example, the New South Wales state government offers a full exemption to first-home buyers on homes valued up to $650,000.
Meanwhile, Victoria offers a full exemption to first-home buyers who purchase a new or established home worth up to $600,000, as long as they live in the property for at least 12 months, and stamp duty discounts to those who buy property valued between $600,000 and $750,000.
State governments generally accept payments online, via credit/debit card or bank transfer. Some also accept payment via cheque.
Stamp duty is invested into the economy by the state and territory governments which collect it.
“This revenue is added into all state government budgets, which typically cover sectors such as health, transport and roads, police, justice and emergency services,” says Walker.
National home prices rose 0.39% in May, marking the fifth consecutive month of growth and a new record high for Australian home values. Click here to read more.
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