June 7, 2022
Stamp duty ain't a pleasant part of your house buying story with the state and territory government tax significantly adding to your already high purchase costs.
With house prices only just beginning to ease after extraordinary rises in the past few COVID years, homebuyers are understandably even more reluctant to hand over their hard-earned cash to the government.
However, in saying this, first homebuyers can have more leeway than more experienced investors and owner-occupiers when it comes to stamp duty.
But firstly, let's start with the basics about this controversial and highly hated tax.
The name comes from the literal use of the actual stamp used to officiate government documents which recorded property sales and as well, the tax the government received for these sales.
Stamp duty is also known as transfer duty.
We shouldn't have to, say many industry experts.
This is not just because those original stamped government documents have now been replaced by far more efficient and accurate record systems, which in turn, take far fewer government staff hours to process.
NSW's stamp duty tax brackets alone haven't changed since 1986, well before computers and the internet changed our lives forever.
Buying and selling property has also become more efficient and accurate.
It's for these reasons that stamp duty has raised so many protests from industry experts and home buyers alike.
As well, this tax raises the cost of an already expensive purchase.
It depends on which state or territory you live in and the purchase price of your potential property with stamp duty based on a percentage of this price.
There are plenty of stamp duty calculators online, including those on government websites, that can help you plan for this tax but bear in mind that they differ widely.
Buying a $600,000 home in NSW will set you back $22,305 in stamp duty while a $1 million purchase will have you handing over $40,305.
In Victoria, owner-occupiers will pay $31,070 in stamp duty for a $600,000 property and $55,000 for a $1 million house.
Head north to Queensland and you can purchase a $600,000 property for just $12,850 in stamp duty or $30,850 for that $1 million property you've been dreaming of.
Talking Queensland's stamp duties, this ain't a bad place to buy for first homebuyers because these people don't have to pay stamp duty at all - at least they don't if their first home is valued under $550,000.
And while Brisbane's median house value is now $770,808, according to CoreLogic, $550,000 can still buy you a fairly good property in the Sunshine State, especially if it has the incentive of no stamp duty coming with it.
As well, Queensland's non-first homebuyers may also be able to claim a stamp duty concession for properties under $550,000, if they're owner-occupiers rather than investors.
Similar first-homebuyer stamp duty concessions are available in other states and territories and are often under the umbrella of first homebuyer grants (FHOG).
In NSW, for example, first homebuyers pay no stamp duty for properties under $650,000 while in Victoria, a nil stamp duty concession is available for first homebuyer purchases of $600,000 or less.
Watch out for this point too with states and territories all having different answers to this question.
Again, an online search or connecting to your state or territory revenue office will assist you.
Some places, like NSW, will request stamp duty payments within three months of signing the sale contract.
Queensland and Victorian governments ask for stamp duty payments within 30 days of a house purchase settlement.
No one knows!
Some state and territory governments have proposed similar possibilities such as NSW Premier Dominic Perrottet's plan for a property tax, rather than stamp duty, allowing homebuyers to pay an upfront figure or a smaller yearly tax.
However, this idea was slammed by industry experts as was the Queensland government for not phasing out stamp duty in its 2021-2022 Budget.
Doing much better is the ACT's plan to modernise its tax system, including stamping out stamp duty, or conveyance duty.
First announced in 2012, the 20-year reform program plans to abolish not only stamp duty but all similar "inefficient and unfair taxes" and replace these figures with an "efficient and equitable rates system".
In the short term, the territory has replaced stamp duty with "barrier-free conveyancing"; however, by 2032, the ACT plans to abolish this tax altogether.
Buying property can be expensive with stamp duty as an added burden, but for now it's here to stay.
Luckily for you, so is Listing Loop!
So, if in doubt about any of your home buying plans including stamp duty worries, talk to us.
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