Everything you need to know about stamp duty
Purchasing a home in Australia is a complex process, and it’s important to understand the various ins and outs of what is required of you as a buyer. If you don’t, you may end up having to pay more than you’d thought, putting unnecessary strain on your finances at what should be a time for celebration!
One of the most common areas where buyers make mistakes is in failing to account for stamp duty. According to a recent report from the Housing Industry Association (HIA), the average amount of stamp duty paid in December 2017 was $20,587. This is a significant amount, so it’s vital to understand what this payment covers, and how much you may have to pay when you purchase a new home.
What is stamp duty?
Stamp duty is a tax that is levied on the purchase of any new home in Australia. As with other forms of tax, the money that you pay is put towards the government’s budget, playing a vital role in improving and maintaining public services.
How much you have to pay will vary from property to property, depending on the price, location and whether or not you’ll be living in the house or renting it out. Stamp duty also varies from state to state, so the amount of tax to be paid in Victoria could be radically different to an identical property in New South Wales.
While stamp duty is an important part of maintaining state government budgets, it is an expensive add-on that can make it difficult for certain buyers to get into the property market. Accordingly, most states offer exemptions or discounts for first home buyers, making it possible to secure a house or unit without breaking the bank.
Stamp duty: State by state
The best way to make sure you know exactly how much stamp duty you’ll need to pay is to check on your state government’s website. There you’ll find a stamp duty calculator that allows you to plug in all of the relevant information about your property, in order to get a fair estimate of the total costs. Alternately, we suggest looking at our calculator to help you with this process.
The formulas used by each state to calculate stamp duty can be quite complex, so you don’t need to worry about understanding all of the mathematics behind the total amount.
What is important, however, is to know how your state’s average stamp duty bill (based on the Housing Industry Association report) compares to the rest of the country.
- Australian Capital Territory: State average: $18,058
- New South Wales: State average: $25,190
- Northern Territory: State average: $20,805
- Queensland: State average: $7,175
- South Australia: State average: $16,705
- Tasmania: State average: $10,927
- Victoria: State average: $31,970
- Western Australia: State average: $15,485
As you can see, there’s a huge amount of variation between states, with a simple trip across the New South Wales border into Queensland potentially saving you nearly $20,000 in stamp duty. It’s also worth keeping in mind that these figures are based on median dwelling prices, so more expensive properties could come with significantly larger stamp duty commitments, while properties of lower value will incur a smaller stamp duty amount.
The bottom line here is that stamp duty is an essential part of purchasing a new home anywhere in Australia, and it’s important to know in advance just how much you’ll likely be required to pay. This will help you budget smarter and ensure that your property purchase runs as smoothly as possible.
For more information on securing the right home loan, contact Beyond Bank today.