Stamp duty is one of the critical things First Home Buyers in Australia need to understand when it comes to buying their first home.
In this guide, we’ll walk you through everything you need to know about stamp duty for first home buyers.
So if you want to:
- Know if you have to pay stamp duty in 2019
- Understand stamp duty concessions for first home buyers in your state
- Figure out borrowing around stamp duty
- What if the property is already rented with a tenant?
Then you’ll love this new guide.
Let’s get started.
Chapter 1: What Stamp Duty discounts do First Home Buyers in Australia get?
In this chapter, we’re going to cover the stamp duty discounts that First Home Buyers in Australia are eligible for.
(Including how it works and the differences in 2019)
I’ll also show you how first home buyers can receive concessions and discounts.
What is stamp duty?
Stamp duty is a tax implemented by the government for any sale or transfer of land. It varies between states and territories, and the money goes towards infrastructure, health, police and emergency services.
The price of stamp duty has gone up in Australia with house pricing.
How do I know if I’m eligible?
In Queensland, to be eligible for the First Home buyers stamp duty concession, there is a specific criterion that you need to fulfil.
(Don’t worry we cover the other states like NSW and VIC below)
So In QLD, you’ll be eligible for the first home buyers stamp duty discount if you:
- ✅ You are over 18 years of age
- ✅ You have never owned land or a residence in Australia or overseas
- ✅ You will live in the property daily, within one year of settlement
- ✅ You will not move possession of the property into someone else’s name before you move in
- ✅ You will pay market value if the property is between $500,001 and $549,999
Read More: Stamp Duty Calculator Queensland
Stamp duty discounts
Stamp duty can be a massive burden on buyers in Australia. In some cases, it feels like just as much money as the deposit you need to save. For example, if you want to purchase a house that is $450,000.
You will need an 8 to 10% deposit of around $45,000 plus you’ll need to pay an extra $1,365 in Queensland for stamp duty.
Or if you’re in ACT, an additional $10,262… ouch!
But how does the cost of stamp duty vary?
The price of stamp duty varies between whether the property is going to be owner-occupied or if it is for investment purposes.
The good news is that First Home Buyers are offered different concessions depending on their state.
How are first home buyers eligible for the stamp duty rebate?
To assist first home buyers on getting into the property market, the government has provided a series of concessions to reduce part or all costs of stamp duty.
Chapter 2: Stamp duty discounts by state
In this chapter, I’m going to go through the different stamp duty discounts per state.
Note: This is an official warning for those in Tasmania; you will probably consider moving to the sunny state after reading this!
Let’s do this.
Queensland Stamp duty discounts
Lucky Queenslanders are eligible for stamping duty-free purchases on their first home for houses valued at $500,000 or less.
In other words, if you are buying your first home to live in Queensland and it costs less than $500,000 you pay no stamp duty 🎉!
This discount serves as a great introduction to the housing market and gives you an indicator of the maximum cost to aim for if you need a starting point.
In Queensland, the maximum rebate you are entitled to receive is $8,750.
Read More: Stamp Duty Calculator Queensland
New South Wales Stamp Duty discounts
Hooray! First Home Buyers in NSW are exempt from paying stamp duty for homes up to $650,000.
And if you’re considering purchasing a home in the next price bracket up (that is houses valued between $650,000 to $800,000), you will be eligible for stamp duty discounts.
So in New South Wales, it pays to be a first home buyer purchasing a property under $650,000!
Read More: NSW Office of State Revenue
Victoria stamp duty concessions
The Victorian government has a few more rules, but there are still stamp duty exemptions.
If you purchased a home after 1 July, 2017 and your house is valued at $600,000 or less you will be eligible to receive the concession.
However, if the value is between $600,001 to $750,000, you will be eligible for a discount on stamp duty.
Read More: VIC First Home Buyer Stamp Duty
Australian Capital Territory first home buyers
The ACT charges stamp duty at a concessional rate under the Home Buyer Concession Scheme.
To be eligible to claim this, the property must be valued between $470,000 to $607,000. For those purchasing vacant land, it must be valued between $280,000 to $323,300.
As of 1 July 2019 the rules have changed and it is now being determined by your combined income, dependents, and whether you will be living in the house or not.
The total combined gross annual income for all applicants and their domestic partners must be below $163,330.
Complete the survey here.
Read More: ACT Stamp duty for First Home Buyers
Northern Territory Stamp Duty
The Northern Territory provides some significant concessions for first home buyers buying a house valued up to $650,000.
Discounts of up to $23,928 are available for those purchasing established homes, and the NT also gives another $10,000 as a renovation grant.
Note from the Northern Territory:
The First Home Owner Discount ceased on 6 May 2019.
However, if you bought an established home up to the value of $650,000 on or before this date, you can still apply for up to $23,928.60 off stamp duty.
If you bought an established home after 6 May 2019, you may be able eligible for the Territory Home Owner Discount. You can get up to $18,601 off stamp duty.
If you are buying a brand new home, you may be able to apply for a first home owner grant instead.
Read More: Stamp duty calculators Northern Territory
For the First Home buyers in Western Australia buying a home valued under $530,000 or purchasing land under $400,000 – a concessional rate will be applied.
Read More: Stamp duty in Western Australia
First Home Buyers purchasing off-the-plan for properties valued under $500,000 will receive a concession of up to $21,330.
The bad news is that these concessions were for those purchasing up until 30 June 2018.
A note from the South Australian Government
As of 1 July 2018, there are no further exemptions or concessions for first home buyers when paying stamp duty.
So standard rates apply, see below.
Tasmania stamp duty
Sorry Tassy First Home Buyers, there are no concessions or exemptions for those purchasing their first home in Tasmania at the moment.
However between February 2018 to 2019 there was a 50% discount, see below.
For first home buyers who have purchased a property between 7 Feb 2018 to 6 Feb 2019 a 50% discount off stamp duty may be available.
The maximum purchase price is $400,000 and the property must have been occupied for at least six months within 12 months of settlement.
Read More: Stamp duty for first home buyers in Tasmania
Chapter 3: Can Stamp Duty fees be added to my loan?
Now it’s time to figure out how you can pay for stamp duty.
Specifically, I’m going to share if stamp duty can be added to your loan and how it needs to be paid.
Can I borrow money from my loan to pay for stamp duty?
The correct way to pay for stamp duty is to use the money from your deposit.
When you take the money out of your deposit, this will then reduce your overall deposit. So you’ll need to borrow more from your lender to fill in this loss. It is for this reason why a deposit of at least 10% is recommended when buying a property.
Speak to our team of expert mortgage brokers about your budget, costs and fees around purchasing a property, to see what is in line with what you can afford.
When will my stamp duty rebate come through?
In Queensland, the rebate will be calculated before settlement.
The costs of buying will be reviewed, including rates and stamp duty and the rebate will be determined.
It is up to your solicitor to notify you should you need to pay stamp duty and the exact amount, before settlement.
You will then be required to give the funds to them or have the money ready in your bank.
Chapter 4: What if the property is already rented with a tenant?
Now it’s time for me to show you how to work with current tenants in the property to get the most out of your purchase.
We’ll also figure out when the stamp duty rebate will come through.
Am I eligible for the rebate if the property is already rented?
In many cases, people sell homes and allow the tenants to continue renting the property.
(They might be on a lease, meaning you can’t just kick them out because you want to move in)
If you’re buying a home with tenants who are already on the lease, then you might be able to work around it.
You might be able to allow the current tenants to stay in the property until up to six months after settlement OR until the lease end date (whichever occurs first). You are then required to move in, and you must stay in the property for 12 months consecutively to claim the rebate – this does change state by state.
It’s best to check with your solicitor or conveyancer on this to make sure this is all possible in your situation.
How can this work in your favour?
If you have a current tenant in the property and are in no rush to move in, you might be allowed to let them to stay in the property.
This could also be a helpful negotiation strategy if the landlord is currently living in the home, and it’s due to the financial stress that they are selling. Allowing them to move out a little later will take the ease off the move for them, and it means you’ll get rent money for another five months.
Again the specific rules around this vary state to state, so check with your local office of state revenue or conveyancer before going down this path.
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