Stamp duty is an essential part of purchasing a house in Australia, but many people don’t really understand the ins and outs of it. We’re going to look at what the purpose of stamp duty is and where the money from stamp duty goes.
What is stamp duty?
Stamp duty is an additional cost paid in addition to the price of a property. It is a type of tax and its value varies from one state to another.
Stamp duty includes general sales tax (GST) and is charged on the following:
- Price of a property
- The market value of a property
This means that the higher the value of a property, the higher the stamp duty will be.
Who is liable to pay stamp duty?
Investors and home buyers are liable to pay stamp duty. When you are looking to buy, it is important to factor this cost into your budget to avoid a sudden shock. If you figure out the estimated amount, you can efficiently manage your finances without unnecessary burden.
When do I have to pay stamp duty?
When you are a buying a property, you will need to pay stamp duty within a period of thirty days from the property’s settlement.
What is stamp duty used for?
State and Territory governments charge stamp duty and collect the money to invest it back into the economy to ensure its continuous growth. Below are some of the sectors where they invest it:
- Justice and emergency services
- Roads and transportations
How Much Does a Buyer Have to Pay for Stamp Duty?
As mentioned, it’s the territory and state governments that decide the amount of stamp duty and not the Federal government. This is why the amount of stamp duty varies from state to state. In order to make it easier for buyers, online calculators are available.
Some states also offer concession to first time home buyers, and if you are purchasing a land, the rates will vary.
Do You Get Exemptions?
Sometimes exemptions may be available in case of a death of a person, but there are certain situations when a buyer does not have to pay stamp duty on his or her purchase. For example, it is not applicable in the case of change of tenancy or if you are transferring the ownership of a property to your partner.
In addition to that, there are various concessions available, which can further reduce the overall burden of stamp duty payments. Below are the transactions that may qualify for concessions:
- Buying a property to use it as a home
- Buying a house as a first time home buyer
Chat to Hunter Galloway about working out the stamp duty required to be paid on the property you are looking at purchasing. Call us now on 1300 088 065 or email Nathan at Nathan.Vecchio@HunterGalloway.com.au