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What is stamp duty when buying a property?
Stamp duty is a state or territory tax on deals such as a change in who owns a property. It is often called transfer duty. The amount depends on the property's location and value, and the buyer's situation. It adds to the cash needed to buy. Some eligible home buyers pay less duty or none.
Updated
What determines the duty on a property transfer?
The local revenue office applies duty to the dutiable value, meaning the value it uses for this tax. Local rules may use the price or market value. Who buys, what the property is used for and any extra charges called surcharges also affect the bill.
Australia has no single duty rate or set of first home buyer discounts. State calculators show the current basis for the bill. A purchase budget needs to cover duty as well as legal work, checks of the property and loan costs. The deposit alone is not all the cash needed.
Does being a first home buyer mean I pay no duty?
No. The buyer, property and deal must meet the rules for a concession. The rules can require you to move in within a set time. They may also say how long you must keep living there.
A grant is separate from a duty concession, and each has its own rules. Buying a rental generally does not meet the rules for a discount aimed at a home you live in. The revenue office's current page explains which buyers and deals qualify.
Is stamp duty deductible on an investment property?
Duty to buy the title is generally not a cost you deduct from yearly rent. The ATO treats it as part of the CGT cost base where those rules apply. The cost base is the total of eligible costs used to work out a gain for tax. This differs from a claim for a yearly rental bill.
Duty on leasehold property, where you buy lease rights, has separate rules. The ATO allows an exception for lease document costs. This includes some ACT crown leases used for rentals, which are leases of government land. Duty on a mortgage is also different from duty to transfer ownership. The type of deal decides its tax treatment.
Illustrative example4 steps
Adding an assumed duty bill to the cash purchase budget
- A buyer has allocated $95,000 to the part of the price not funded by the loan.
- Assume a duty bill of $22,000 and other purchase expenses of $4,000.
- Total cash required: $95,000 plus $22,000 plus $4,000 = $121,000.
- Ignoring these costs would leave a $26,000 gap in the purchase budget.
For investors
Transfer duty is paid upfront but accounted for differently from rent expenses.
An investor needs cash to pay duty when the state or territory requires it. Eligible purchase duty in the CGT cost base can affect the gain taxed on a later sale. It does not refund the duty bill or give you a rental deduction now. Purchase papers and duty receipts record the deal. Your accountant or registered tax agent can check the treatment, including any leasehold exception.
Common questions
Questions about stamp duty
Keep learning
Property is a complex world.
Stamp duty is one piece of it. Taxes and duties decide what a property really costs to buy and to hold. Next, read about capital gains tax, land tax and holding costs.
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