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What is stamp duty?
Stamp duty is a government tax that applies when you purchase a property or transfer the title of a property to someone else. It is also referred to as transfer duty, property transfer duty, and land transfer duty.
Stamp duty applies to transactions involving dutiable property (property that is subject to a tax) such as:
- Real estate
- Motor vehicle registrations and transfers
- Insurance policies
Why stamp duty is required
Governments charge stamp duty on dutiable properties in order to generate revenue for their state or territory. This revenue will typically be used for the public sectors such as education, health care, and transport. For this reason, most governments tend to limit stamp duty concessions and exemptions when purchasing a property in order to maintain revenue.
How can I avoid stamp duty in Australia?
There are a few ways you can avoid paying stamp duty in Australia. However, as mentioned above, it will depend on each state and territory and your individual circumstances. We have listed out some common exemptions below.
First home buyer stamp duty exemption
Generally, there are stamp duty exemptions and concessions for first time home buyers in most states and territories. For example, in Queensland, first home buyers can claim a stamp duty concession for homes valued under $550,000, saving themselves thousands.
Purchase a cheaper home
One of the major factors in calculating stamp duty, regardless of which state or territory you are in, is the value of your property. Generally, the higher the value of your property, the more stamp duty you will have to pay. Consider purchasing a cheaper home to minimise the amount of stamp duty you have to pay, or to possibly avoid stamp duty altogether.
Consider building your home
Some states offer reduced stamp duty rates if you purchase a vacant block of land and build your own home on it. In Queensland, for example, you may be eligible for a stamp duty concession if you buy a vacant block of land (worth less than $400,000) and build a home you intend to live in.
These offers can change from year to year, so it’s important to check with your lender or mortgage broker as to what concessions are available.
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Read moreStamp Duty Frequently Ask Questions
If you haven’t used a finance broker before, you probably have some questions. Let’s help you get some answers.
Can stamp duty be added to a mortgage?
Because stamp duty is generally considered an upfront cost, it cannot be added to your mortgage. There are some stamp duty concessions and exemptions, but this will depend on your individual circumstances and the stamp duty laws of your state or territory.
Why is stamp duty so high?
As stamp duty is used to generate vital revenue for the government in each state and territory, stamp duty can be high. However, generally, the more a property costs to purchase, the higher the stamp duty will be.
Which state has the most expensive stamp duty in Australia?
As stamp duty is a fluctuating cost that varies between each state and territory, no state holds the title of most expensive. Instead, it’s important to assess each state individually in relation to the type of property you wish to purchase (such as owner-occupied, investment property etc.)
At Oceania Finance, our mortgage brokers are experts at calculating stamp duty for any property type and state. Contact us today for more information.
Is stamp duty tax deductible?
As stamp duty is considered a capital cost, it is not tax deductible. A capital cost is a once-off expense incurred in the purchase of land or property.