When you buy a property, there are certain taxes that are collected by the state and territory governments. One such tax is the stamp duty.
Stamp duty is a little-known form of tax that tends to catch most property buyers unawares. It is based on the price paid for the purchase and it can significantly drive up your property transaction costs if you’re not adequately prepared.
Let’s take a look at some of the most common questions relating to stamp duty and what it means for people planning to purchase the property.
To learn more about the specifics of this complex tax, we’ve detailed everything about who pays stamp duty in this comprehensive article.
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This tax form can creep up on property buyers. It can make their transaction costs much more expensive. It’s always best to know how much stamp duty you should pay so you can avoid the unexpected headache when closing your transaction.
What is stamp duty?
Stamp duty can be described as a tax imposed on the transaction of property. This includes mortgages and motor vehicles. The rate of the stamp duty imposed on each transaction depends on the state or territory you live in. It is also affected by the value of the transaction.
Like to be sure about the stamp duty you’ll need to pay? Try the stamp duty calculator for your specific property transaction.
Who pays stamp duty?
In real property transactions, the stamp duty is paid by the person acquiring the property.
When do you pay stamp duty?
Payment of the stamp duty tax should be done within a strict timeline. You may find yourself being liable to fines or penalties if you fail to pay within the specified time period.
If you’d like to know when is stamp duty payable, you first need to consider the state where you live. Here are the time limits for paying stamp duty in the different states.
WA
It should be paid within a period of two months after settling the transaction.
NT
The payment should be within 60 days of entering the transaction or once the transaction is settled, depending on which one is earlier.
TAS
The timeline falls within three months of the transfer taking place.
QLD
The stamp duty payment falls due within 30 days after the transaction is settled.
VIC
The stamp duty should be paid after 30 days of the property being transferred.
SA
The stamp duty falls due on the day of settling the transaction.
ACT
Stamp duty should be paid within 28 days of settlement. Once the settlement is complete, the buyer has 14 days to lodge their transfer instrument with Access Canberra. The buyer will then receive an email from Access Canberra with the Notice of Assessment. Once they receive the notice, they are required to pay the stamp duty within 14 days.
NSW
Stamp duty is payable within three months of the transaction being settled. If the transaction is made as ‘off the plan’, then it should be paid within three months after the agreement is complete.
Get the Full Picture: Delving into property transactions in New South Wales? Understand the financial implications with our detailed article on stamp duty in NSW.
Learn more about stamp duty exemption in NSW in Soho’s guide.
Can you get an exemption to stamp duty payment?
There are various exemptions provided when it comes to payment of taxes; stamp duty included. In most states, exemptions are provided after a death, a divorce or if the property is transferred from one family member to another.
Concessions also apply depending on the jurisdiction. The different states have specific requirements for concessions. In some cases, property owners enjoy complete exemptions.
Some states offer concessions to first home buyers. The amount of concession depends on the value of the property itself and whether it’s a new property or a vacant lot.
There are other forms of concessions in different states. One common form is concessions for pensioners. Concessions may also be provided for people who plan on living in the home that they purchased.
It is wise to get information on the available concessions in your state. Get in touch with a qualified accountant or tax adviser.
How are stamp duty payments made?
Stamp duty can be paid through the use of several payment avenues such as bank transfers, online payments, and credit or debit cards. Some states may also accept cheques as a means of payment.
When is GST payable on sale of property?
Goods and Services Tax, commonly referred to as GST is a form of tax that applies to the sale of most goods and services. GST also applies to property transactions depending on the specific circumstances.
In property transactions, Goods and Services Tax doesn’t apply when a person buys or sells a home that they intend to live in. However, GST can be levied when a residential home is being sold as a new property.
GST is also imposed when the purchase or sale of a property is done for business purposes. This also includes buying a house outright with cash as a one-off transaction.
What is stamp duty used for?
The stamp duty taxes collected in different states are utilised to provide essential services in those territories. Such services include transport services, health services, emergency services, and law enforcement. These funds are invested into the local economy and they help to improve the quality of life for the local residents living in those states.
The drawbacks of stamp duty tax
It significantly increases the cost of property transactions
In a time when most people dream of owning their own home, stamp duty can sometimes sideline this goal by significantly increasing the property transaction costs. In recent decades, property prices have been rising steadily. Since stamp duty is based on the value of the transaction, this has resulted in the associated costs being much higher.
Behaviour changes in the market
Stamp duty can sometimes be a barrier to people who wish to enter the real estate market. The result of this is more and more people looking for different investment avenues because they simply can’t afford to buy real estate.
Unfortunately, it also discourages people who want to make important life changes. For example, retirees looking to move to a smaller residence might be unable to because the taxes involved makes it too expensive to buy a new home.
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