Stamp Duty Exemptions: Am I Eligible for Stamp Duty Exemptions?
When determining how much you can afford, it is critical to understand how stamp duty applies to your property purchase.
One of the more significant costs associated with purchasing a home is transfer or stamp duty. When buying a house or apartment, stamp duty can add tens of thousands of dollars to your budget, though some concessions and discounts may be available. It is critical to calculate your stamp duty costs before purchasing a home.
What exactly is stamp duty?
Stamp duty is a government tax levied on specific transactions. It is usually required when purchasing a car, an insurance policy, or real estate. Stamp duty on real estate is also known as “land transfer duty.”
The amount of stamp duty levied on a transaction varies according to where you live, the type of transaction, and its value.
Stamp duty rates vary depending on where you live in Australia. You can find out how much stamp duty applies to the property you want to buy by using an online Stamp Duty Calculator. The amount you must pay may also be determined by the following factors:
- whether you are purchasing a primary residence or an investment property;
- whether you are a first-time home buyer;
- whether you are purchasing an established home, a new home, or vacant land;
- whether you are a foreign purchaser.
When purchasing a home, you will typically be required to pay stamp duty within 30 days of settlement. Your conveyancer or solicitor will usually arrange for your stamp duty to be paid to your state revenue office on your behalf.
What is the procedure for obtaining a stamp duty exemption?
Stamp duty, which can be costly and often requires payment in advance, can be a deterrent to purchasing in the first place. Because state and territory governments recognise this, they may waive or reduce stamp duty on occasion:
- For certain types of buyers, such as first-time homebuyers and retirees,
- On certain types of real estate, particularly new homes and off-the-plan purchases, or
- Both of the preceding.
This can encourage buyers to enter the property market while also encouraging development, as builders know that buyers will find it cheaper to buy their properties than an existing home.
The NSW government is considering a “once in a generation” stamp duty change that will give home buyers the option of paying stamp duty upfront (and land tax where applicable) or opting in to a new, smaller annual property tax instead of stamp duty.
This deduction can only be claimed in the year in which the actual payment for these expenses is made. If you purchase a property on August 30, 2018, and pay the stamp duty and registration fee, you can claim these expenses under section 80C only in fiscal year 2018-19. This deduction is available to both individuals and HUFs on their income tax returns.
How to calculate stamp duty?
The total dutiable value of the property subject to the transaction is used to calculate stamp duty.
The current rates and thresholds for NSW are as follows (if you purchased your home prior to July 1, 2020, these rates will be slightly different):
|Value of the property subject to the transaction||Rate of duty|
|$0 – $14,000||$1.25 for every $100 or part of the value|
|$14,001 – $31,000||$175 plus $1.50 for every $100 that the value exceeds $14,000|
|$31,000 – $83,000||$430 plus $1.75 for every $10 that the value exceeds $31,000|
|$83,000 – $310,000||$1,340 plus $3.50 for every $100 that the value exceeds $83,000|
|$310,000 – $1,033,000||$9,285 plus $4.50 for every $100 that the value exceeds $310,000|
|over $1,033,000||$41,820 plus $5.50 for every $100 that the value exceeds $1,033,000|
|Premium Property Duty: over $3,101,000 (residential property only)||$155,560 plus $7.00 for every $100 that the value exceeds $3,101,000.|
Who is eligible for a stamp duty exemption?
Stamp duty exemptions vary by state or territory, depending on state or territory government policy.
In Queensland, for example, purchasers buying to live in rather than invest in a property may be eligible for a concession.
In Victoria, the government offers a pre-construction discount to buyers who purchase a land and building package or a refurbished lot. Many other jurisdictions restrict eligibility to first-time home buyers or other special categories of buyers. Visit the relevant page in your State or Territory to see if you are eligible for a stamp duty concession.
NSW Stamp duty exemptions for first home buyers
In New South Wales, the First Home Buyers Assistance Scheme provides the following exemptions for first-time home buyers purchasing existing property:
- If your property is worth less than $650,000, you will not have to pay transfer duty.
- If your property is worth between $650,000 and $800,000, you may be eligible for a discount.
Exemptions are even more generous if you are a first-time home buyer purchasing a new home or vacant land:
- There is no transfer duty if your property is valued at less than $800,000 USD.
- Concessions are available for properties worth up to $1,000,000.
These additional exemptions are valid for a 12-month period beginning on August 1, 2020.
Eligibility- To qualify, you need to:
- Be over 18 and a permanent resident or citizen
- Have never owned a property before
- Have never received a first home owner grant or concession before
In New South Wales, the purchaser or transferee is required to pay stamp duty. When a sale or transfer occurs, the purchaser or transferee becomes liable. Stamp duty is due three months after contracts are exchanged or on settlement, whichever occurs earlier.
The Office of State Revenue in New South Wales accepts payment in person, by BPAY, Electronic Funds Transfer (ETF), mail, or in advance. If you cancel your sale transfer, the transfer is no longer subject to duty. On the NSW Revenue website, you can apply for a refund. Other fees associated with stamp duty include a transfer fee and a mortgage registration fee.