Stamp duty, also known as stamp taxes or transfer duty, is a tax one has to pay when buying a house. It is a tax placed by a government on legal documents that usually involves the transfer of a real estate or other assets.
Governments impose stamp duties on documents that are required to be recorded legally on such transactions. Military commissions, patents, marriage documents, copyrights etc., are other documents for which stamp duties can be imposed.
The price of the property you buy and the state or territory you live in define the exact amount of stamp duty. There are exemptions sometimes. On top of the deposit, mortgage and other expenses that come along with buying a property, on average, tens of thousands of dollars are spent on it by Australians.
Money from Stamp duties is raised to fund the activities of the government. The generated revenue is then used for projects related to the public sector, such as education, health, transport and infrastructure. It is believed that Stamp duties originated in the early 17th Century in Spain.
They were called 'Stamp' duty because an actual stamp was put on the document for proof that the tax liability had been paid and that the document had been recorded officially.
It takes a good few calculations to determine the exact cost. If you want to get a rough idea of what you should expect to pay for stamp duty, go through the below-mentioned points:
Generally, it differs by state and territory. Each state decides the price of stamp duty and has different sets of price brackets, rates and exemptions.
The key factor in calculating your cost will be the price of the property you are going to purchase.
You may have been entitled to Stamp duty exemptions.
Pensioners and first-home buyers in some states do not have to pay any Stamp duty on homes of a particular price. Under certain circumstances, there are reduced rates for those who do not qualify for a full exemption.
During the pandemic, the Victorian government announced up to 50% off on homes of a particular value for a limited period of time. It is highly recommended that you check your state or territory's list of exemptions to make sure you qualify for a concession.
At the time of a property purchase settlement, Stamp duty is supposed to be paid by the buyer, not the seller. The timeframe differs from state to state, just as the rates. States and the timeframe in which the stamp duty should be paid:
Your solicitor will be the one who will let you know how you need to make the payment regarding Stamp duty. It will then be your duty to make sure everything is submitted on time.
Before purchasing a property, you must be aware of a few issues related to Stamp Duty.
Buying a property is the dream of any individual and will also be the most significant purchase ever made. However, when we consider the purchase financially, it can be a high bar to get over. Over the past few decades, property prices have skyrocketed and are definitely higher than the average income. This means that the cost of Stamp duty is a high tax.
Stamp duty is an added cost that can be a barrier for people who are trying to enter the real estate market. This added cost may lead to changes in behaviour.
To avoid Stamp duty, a family may choose to stay in their current house and never move even if the family keeps growing, even if they find halal home loans to secure a home. Simply because it will cost a lot in tax, people may often stay in houses that could be better for them or their needs.
An old system of government is where the original tax for Stamp duty comes from. Since the way a property is bought and sold has changed through the years, it is time to have an updated tax system.
Certain types of people are exempted from paying Stamp duty entirely in a few states.
In New South Wales, Victoria and Western Australia, you might be eligible for a reduction or exemption if your property is below $800,000. In contrast, lower-income buyers in the Australian Capital Territory can avoid it. Even though there are no full exemptions, reductions are available in Queensland, the Northern Territory and Tasmania.
In Sydney and Melbourne, the median house price is massively high, so there are no chances. Plus, there are no exemptions in South Australia.
Yes, you still have to pay Stamp duty even if someone is giving you the property. Whether you are buying the property for yourself or giving it away, it is necessary to pay Stamp duty.
You can still certainly look out for the exemptions just as you would if you were the one buying the property.
First-time home buyers need to pay Stamp duty, but there are reductions available in most states.
Total exemptions are available in some states for first-time home buyers with a property under a specific price value or certain types of homes, such as vacant land, farms and off-the-plan homes.
Purchasing properties is tedious, but once you get it right, it will feel like you did the right thing. If you want to secure a home, don't hesitate to contact us.
In the journey to homeownership, financial acumen plays a vital role in determining how smoothly you can navigate the labyrinth of loan repayments. Among the financial tools that can potentially speed up this journey, and save you money, is offset accounts in Islamic Home loans. But what exactly is an offset account? How does it […]
National Australia Bank (NAB), guided by Dr. Imran Lum, has been honoured with the Islamic Bank of the Year award at The Asset Triple A Islamic Finance Awards 2023. Though not primarily an Islamic bank, this recognition serves as an unequivocal endorsement of the strides NAB Islamic Finance has made in the sector, both within […]