Stamp duty: the hefty amount of money that home buyers need to pay upfront when purchasing a property. Or, in slightly more technical terms: a tax that revenue offices levy on consumers whenever they purchase anything that’s property-related (it can also be referred to as land transfer duty).
But when is it due? How much will it cost? And can you get out of paying it? Usually, you’ll have to pay it right before settlement to avoid delays, but you'll want to make sure to pay it no longer than three months after the contracts have been exchanged. Otherwise, you risk incurring interest charges.
Because there isn’t a universal value imposed on various estates. The amount that buyers have to pay isn’t set in stone, as it depends on the rates provided by the state’s revenue offices. So, it varies from one state to another.
Knowing how much you’ll have to pay in stamp duty will better equip you for claiming your own property:If you fancy yourself getting a $450,000 worth of property, and the stamp duty costs $8,000, you’ll wind up paying $458,000.
To determine how much you’re going to fish out of your pocket, you'll want to know that stamp duty depends on these three factors:
1. The state where you live
Some states impose much higher taxes than others. They also have varying rates of concessions and exemptions, if you are eligible for one. It's important to make sure you know your state's rules and regulations regarding stamp duty: For example, South Australia abolished it in 2009, and if you're a first-home buyer in Victoria you won't have to pay stamp duty on a home that cost less than $600,000, as long as you live there for at least 12 months.
2. The cost of the property
The more expensive your property value is, the higher the stamp duty will be. Beyond this, typically state revenue officers will institute a heavier tax once the property is valued over $500,000.
3. The type of home purchased
Yes, this makes a difference too: a property full of bells and whistles can actually see a rise in duty, while (as mentioned earlier) a vacant property will see a significantly lower tax bill compared to when you buy a land and house package.
There’s no way that you can dodge paying your stamp duty. However, there are ways to avoid cashing out much more from your bank account, such as choosing a cheaper property, changing states, and lowering your building costs.
Most states, it not all, offer concessions and exemptions for first time buyers. It’s a great financial boost for people who are looking for their first-owned pads or people settling down to start a family.
If you are eligible for one of their first home buyer relief options, one of the common stipulations, like in Victoria, is that you must reside in your property for at least 12 months.
Aside from first time buyers, there are other criteria that treasury offices consider for stamp duty relief, including whether you're a pensioners or a health card holder. They also take into account the value of your purchased property. As always, the lower the price tag, the lower the amount of the tax.
To have an estimate of how much stamp duty you’ll need to pay in order to lay your hands on those house keys, you can try our online calculator to see just how much it’s going to cost. You can also try visiting the state revenue offices to have the most accurate computation of your property acquisition.
Paying stamp duty is not as intimidating as it sounds. Normally, a mail will be sent to you via courier with the address of the property that you bought or whatever address you’ve specified on it if you choose to have an alternate mailing address. Instructions on how to make the payment will be enclosed, whether it be through credit card, bank deposit, bank transfer or cheque.