How to Calculate Stamp Duty: A Simple Guide for Home Buyers

Securing a property is no achievement to scoff at, but that initial excitement can be quickly followed by the complexity of upfront costs. Taxes are an unavoidable and critical part of financing any major asset, including real estate. Right at the top of that list is stamp duty, a major expense you need to factor in to avoid a nasty shock at settlement.

This guide will break down the essentials of stamp duty, giving you the know-how to budget properly for your new property.

Key Takeaways

• Stamp duty is a state-based tax paid by the buyer when property changes hands.
• The exact rate varies wildly between states and territories and depends on the property’s value.
• It’s a high upfront cost that must be paid near or on the settlement date.
• First home buyers are often eligible for full exemptions or major concessions, substantially lowering the cost.
• Stamp duty is not immediately tax-deductible but is added to the property’s cost base for Capital Gains Tax (CGT) purposes.

What Is Stamp Duty?

Definition and purpose of stamp duty

So, what is stamp duty? It is a tax levied by Australian state and territory governments on certain legal documents and transactions, most commonly the sale or transfer of property. It might be referred to as ‘transfer duty’ or ‘land transfer duty’ in some regions, but it all refers to the same expense. The state governments rely on this revenue to fund essential services like health, police, transport, and education.

How it differs from other taxes

Stamp duty is a one-off, upfront transaction tax paid when you acquire a property. This is different from ongoing annual property taxes like land tax (which is typically paid by investors or high-value homeowners based on the land value, not the transaction price) or the yearly council rates you pay to your local government for local services.

State variations

Stamp duty is not set federally. Instead, it’s controlled by each state and territory. This means the rates, thresholds, exemptions, and concessions can differ dramatically depending on whether you’re buying a property in Sydney, Melbourne, Brisbane, or elsewhere.

How to Calculate Stamp Duty

Step-by-step process

Learning how to calculate stamp duty involves working out the ‘dutiable value’ (usually the higher of the purchase price or market value) and applying the relevant tiered rate set by your state.

1. Determine dutiable value: Use the contract price or the market valuation of the property.
2. Identify state rates: Check the tiered or marginal tax rates for your specific state/territory revenue office.
3. Apply tiers: Calculate the duty based on the state’s sliding scale, where different portions of the value attract different tax rates. For example, the first $100,000 might be taxed at 1.5%, and the next bracket at a higher rate, and so on.
4. Subtract concessions: If you’re eligible for any concessions (like a first-home buyer discount), deduct that amount from the total.

Using online calculators

The easiest and most accurate way to get an estimate is by using the official online stamp duty calculators provided by each state’s revenue office. These tools factor in the exact rates, property use (owner-occupier vs. investment), and eligibility for concessions, giving you a tailored figure without having to manually navigate the complex rate tables.

Examples for different property values

Because rates are tiered, the tax is progressive. For an approximate guide (note: these are not actual figures and are for illustration only):

• Small residential property ($400k): The duty rate might be lower, perhaps resulting in a total duty of around $10,000 to $15,000.
• High-value property ($2 million): The total duty will be much higher, with a progressively higher effective tax rate, potentially pushing the duty to over $100,000.

Stamp Duty for First Home Buyers

Good news for those trying to get on the property ladder — eligibility for stamp duty for first home buyers (FHBs) is one of the biggest benefits offered by the state governments.

Concessions, exemptions, or discounts

Most states offer generous exemptions or concessions (discounts) to eligible first home buyers purchasing their principal place of residence.

• Exemption: You pay absolutely zero stamp duty up to a certain property value threshold.
• Concession/discount: You pay a reduced rate for properties valued above the full exemption threshold, but below a higher concession limit.

These specific thresholds vary significantly. For example, one state might offer a full exemption for properties up to $700,000, while another’s threshold might be $800,000. It is critical to note that state rules change often, sometimes to support specific housing goals. 

For instance, in an effort to boost housing supply, the Victorian government expanded its off-the-plan duty concession (effective from 21 October 2024) to offer significant savings to all buyers (not just first home buyers) of new homes by removing the property value cap. 

Always check the relevant State Revenue Office (SRO) website for the latest temporary concessions as they can offer huge  savings.

How it affects the overall purchase cost

A full exemption can save a first home buyer tens of thousands of dollars, making a massive difference to the total upfront cash required. This saving can be redirected towards a larger deposit or cover other costs like conveyancing and Lenders Mortgage Insurance (LMI).

Stamp Duty Payment Details

Let’s dive into the ‘when’ and ‘how’ of paying stamp duty.

When is stamp duty payable?

But when do you pay stamp duty? For most property purchases, you generally pay on or before the day of settlement. However, the strict legal deadline varies by state, typically ranging from on the day of settlement (e.g., South Australia), to 30 days after settlement (e.g., Victoria and Queensland), or up to three months after the contract date (e.g., NSW).

Payment process overview

The process is usually handled by your conveyancer, who will lodge the necessary forms with the relevant SRO and facilitate the payment as part of the settlement process. The funds come from your side (the buyer) and are directed to the state government.

Deadlines and penalties

It’s critical to stick to the state’s payment deadline. If you fail to pay on time, you will be hit with interest charges and penalties, which can be hefty, so leave this in the hands of your legal professional.

Selling a Property & Stamp Duty

Do you pay stamp duty when selling a house?

The answer is a straightforward no. Stamp duty is a purchaser’s cost. As the vendor (seller), your main transaction costs will be real estate agent commission and legal fees.

Who is responsible?

The responsibility for paying stamp duty lies squarely with the buyer, or anyone receiving the transfer of the asset. The seller simply pockets the proceeds (minus their selling costs and mortgage repayment). This clarifies who pays stamp duty in a typical property transaction: the one acquiring the property.

Is Stamp Duty Tax Deductible?

Clarify deductible scenarios

When it comes to primary residences, you cannot claim stamp duty as an immediate deduction on your income tax.

Differences for investment properties vs. primary residences

This case can differ depending on the type of property acquired:

• Primary residence (owner-occupied): Stamp duty is considered a non-deductible personal expense.
• Investment properties: While you can’t claim it as an immediate annual income tax deduction (like interest or maintenance), the stamp duty cost is added to the property’s cost base. This is a major distinction. When you eventually sell the investment property, this higher cost base will reduce your overall capital gain, meaning you pay Capital Gains Tax (CGT) on a lower profit.

Examples & Calculation Scenarios

To help you better understand what stamp duty looks like for different properties, here are a few hypothetical scenarios in varied states.

Note: These figures are illustrative only. Rates vary by state and are subject to change. Always verify with your legal representative or the relevant SRO.

How first-home concessions affect calculations

As you can see, the concessions for first home buyers can make a massive difference. In Example 1, a property value under the FHB threshold results in a zero-duty outcome, saving the buyer thousands of dollars that a non-FHB would have to pay upfront.

Tips to Plan & Reduce Stamp Duty

There are various paths buyers can take to make settling stamp duty less of a hassle. 

Strategies like timing purchases, splitting property, or concessions

Beyond the standard calculations, you can use these key strategies to lower your tax burden and keep more of your capital for your property deposit.

• Check FHB eligibility: If you’re a first home buyer, make sure you meet all criteria for the full exemption or concession in your state, as it’s the biggest saving available.
• Factor it into your budget: Don’t forget stamp duty when calculating your total purchase costs, as it can be tens of thousands of dollars on top of your deposit.
• Review property structures: For high-value investments, consult with an expert to see if there are any legitimate structure-based strategies that could affect the dutiable amount (e.g., buying land then building).

Using calculators to forecast costs

Using state-specific online calculators lets you forecast the total cost for different property values, helping you set a realistic budget limit for your house hunt.

Because rates and concessions change frequently, the most accurate way to forecast your costs is by using the official tools provided by each state’s revenue office:

• New South Wales: Revenue NSW Transfer Duty Calculator
• Victoria: State Revenue Office Victoria Land Transfer Calculator
• Queensland: Queensland Revenue Office Transfer Duty Estimator
• Western Australia: Western Australia Transfer Duty Calculator
• South Australia: RevenueSA Stamp Duty Calculator
• Tasmania: Tasmania Property Transfer Duty Calculator
• Australian Capital Territory: ACT Revenue Office Conveyance Duty Calculator
• Northern Territory: NT Land or Property Transfer Stamp Duty Calculator

Take the Guesswork Out of Your Next Investment

Identifying the upfront costs is only the beginning. InvestorKit assists buyers by performing the market research, and due diligence required to secure a high-performing asset. As a trusted residential buyer’s agency, we manage the search and negotiation process so you can avoid overpaying and stay within budget.

Learn how to buy smart. Book a free discovery call with our property experts today.

FAQs

When do you pay stamp duty?

In most cases, you pay stamp duty at the settlement of the property, though the legal deadline set by each state can range from settlement day up to three months after the contract date. Your conveyancer or solicitor will manage this.

Is stamp duty tax deductible?

No, not as an immediate tax deduction. For your primary residence, it’s a non-deductible personal cost. For an investment property, it is added to the cost base to reduce the Capital Gains Tax (CGT) payable when you eventually sell.

Do you pay stamp duty when selling a house?

No. Stamp duty is a cost paid by the buyer of the property, not the seller (vendor).

Who pays stamp duty?

The buyer is legally responsible for paying stamp duty (or transfer duty) on a property transaction in Australia.