Stamp Duty on New Homes – What to Expect

If you’re building or buying a new home, there’s a good chance you’ll need to pay stamp duty. If you’re not familiar with the term, stamp duty (also called transfer duty) it is a tax that Australian state and territory governments levy on property purchases. In this post, we explore the general ins and outs of stamp duty on new homes.

What is stamp duty?

Stamp duty is a tax levied against those who decide to buy a property or land.

How is stamp duty calculated?

In Australia, every state and territory has different stamp duty rates and rules. Generally speaking, a stamp duty obligation is determined by a property’s purchase price, type (existing home, new home or vacant land) and purpose (primary residence or investment property). Foreign buyers (non-residents) are also charged an additional stamp duty levy in New South Wales, Victoria and Queensland.

Are exemptions and discounts available?

Exemptions and discounts are available to certain types of buyers. Eligible first home buyers enjoy a stamp duty discount or exemption in several states and territories, as well as indirect relief through the First Home Owner Grant (FHOG) scheme. Eligible pensioners enjoy generous discounts on stamp duty in the Australian Capital Territory and the Northern Territory.

What assistance is available to first home buyers?

A first home buyer is someone who has never owned a residential property in Australia – nor has their partner.

In Australia’s three most populated states – New South Wales, Victoria and Queensland – the stamp duty rate is 0% for eligible first home buyers who meet a specific criteria. Some states and territories – namely Tasmania, South Australia and the Northern Territory – don’t provide stamp duty relief, but try to compensate with a higher First Home Owner Grant (FHOG).

The First Home Owner Grant (FHOG) – a Federal government initiative designed to offset the impact of the Goods and Service Tax (GST) – can be used to indirectly offset the cost of stamp duty. Although the FHOG is a Federal initiative, it’s administered and funded by the various state and territory governments. Further details can be found at: http://www.firsthome.gov.au/

Can stamp duty be minimised?

Stamp duty can be minimised legitimately by purchasing a house and land package. Provided the house hasn’t been built yet, stamp duty is only payable on the land component of the package. This benefit is available to all types of buyers. To make things easier, G.J. Gardner Homes offers a large range of house and land packages across Australia.

Is stamp duty tax deductible on investment properties?

Stamp duty, which is classified as a capital expense by the Australian Taxation Office (ATO), isn’t tax deductible. However, it can be added to the “cost base” of an investment property when calculating the Capital Gains Tax (CGT) on a subsequent sale. Further information is available on the ATO Website.

(Important Note: Due to the complexity and ever-changing nature of tax laws, always seek professional tax advice when making tax-related decisions.)

When should stamp duty be paid?

In Australia you will need to pay the stamp duty no more than 30 days after the settlement of your property purchase. The property’s value determines how much stamp duty you will pay. Of course, each state has its own rates in place, which can complicate things. Below are details on when to pay stamp duty depending on the state.

Australian Capital Territory

Payable within 28 days after the settlement is complete. An agreement is considered to be made when the buyer receives a notice of assessment from the offices of Canberra.

New South Wales

Stamp duty is payable within three months of the settlement being completed.

Northern Territory

Payable 60 days after the settlement or after entering into the transaction – whichever comes first.

Queensland

Paid within 30 days of the settlement being complete.

South Australia

Payable on the day the settlement is complete.

Tasmania

Paid 3 months after the transfer is complete.

Victoria

Payable within three months after the settlement is complete.

Western Australia

Payable within two months after the settlement is complete.

Failing to pay within the stipulated time shall attract additional penalty rates and interests.

Stamp duty on a new house

In Australia’s three most populated states, the stamp duty rate on a new house is 0% if the owner meets specific criteria. Some states and territories – namely Tasmania, South Australia and the Northern Territory – don’t provide stamp duty relief, but try to compensate with a higher First Home Owner Grant (FHOG).

Further Information

As you’ve probably gathered, stamp duty is inherently complex. Every state and territory government has its own rate schedules and rules. For further information on stamp duty, please visit the relevant state or territory government website listed below. Alternatively, feel free to contact G.J. Gardner Homes for assistance with calculating the stamp duty on a new home.

Australian Capital Territory – www.revenue.act.gov.au

New South Wales – www.osr.nsw.gov.au

Northern Territory – www.treasury.nt.gov.au

Queensland – www.osr.qld.gov.au

South Australia – www.revenuesa.sa.gov.au

Tasmania – www.sro.tas.gov.au

Victoria – www.sro.vic.gov.au

Western Australia – www.osr.wa.gov.au