Stamp duty goes hand in hand with buying a house. You may have heard about it but aren't quite sure what it really is or how much it costs.
Many people don't consider stamp duty when saving for a home which means they can be left with an unpleasant surprise when they apply for a home loan and realise they haven't quite hit their savings goal.
What is stamp duty?
In short, stamp duty is a tax charged by state and territory governments on the sale of a property. The cost covers the fees relating to changing the title and ownership details of a property, which can also be known as Land Transfer Duty. The money received from stamp duty is invested into the economy by each state and territory government.
How much does stamp duty cost?
The cost of stamp duty is dependent on a few things, the biggest being the price or value of the home you're buying. Another factor is where your new property is located. Depending on the state or territory you're buying in will determine what percent of the purchase price or property value you will have to pay. Other factors that influence the cost of stamp duty include:
• If you plan to live in the home;
• If the home is brand new;
• If you are buying land; and
• If you are an overseas purchaser.
Depending on these factors, you could be paying as little as a few thousand to over $50,000!
By using our stamp duty calculator (above), you can estimate the amount of stamp duty and additional government fees that might apply in the price range of the home you plan to buy.
Stamp duty is an upfront cost which means you can't add it to your home loan and pay it off in smaller repayments. If you haven't budgeted for it, you may have just realised you no longer have enough saved for a 20% deposit. If this is the case, you may be able to pay Lenders Mortgage Insurance to get into your new home sooner.
When do I have to pay it?
Just like the cost, stamp duty payment timeframes vary by location. Payment dates per state range from on settlement date to within 90 days after. All this information can be found on your local state government website and will be provided to you when you receive your payment details. Keep in mind that you could incur penalty fees if you miss the due date.
How do I pay for stamp duty?
Unlike saving for it, paying for stamp duty is pretty simple. You will likely receive a letter in the mail with all the details including how much you need to pay, how and by when. Some conveyancers can also help you arrange the payment as well.
Are there any exemptions?
In some states there are stamp duty concessions available for first home buyers so make sure you check this out. Other potential exemptions in some states include transferring a property after a death and transferring a property to a family member. If you believe you fall under any of these, it's worth looking into as you could be saving yourself a big bill that could be better spent towards new furniture or better yet, reducing your home loan.