Stamp Duty – what even is it?
Stamp duty is a tax imposed by the relevant state government on real estate acquisitions and purchases. Stamp duty is payable in addition to the purchase price, and, the amount that is charged is regulated by the relevant state government in which the property is located. The amount of stamp duty that a purchaser is required to pay is also dependent on the purchase price of the property.
Stamp duty (or “transfer duty” in QLD), is payable by purchasers during the conveyancing process and is, at times, considered as a ‘surprise expense’ in the process. Many purchasers are not aware that stamp duty must be paid prior to the transfer of land (which registers the property into your name) being accepted by the titles office. Although some purchasers may be eligible for concessions and exemptions, the payment of stamp duty is an inevitable expense associated with purchasing a property.
Did you know?
The relevant due date for stamp duty depends on which state you will be purchasing in – it is therefore essential that, as a purchaser, you are aware of the stamp duty regulations in the applicable state. This blog will briefly touch on NSW and QLD.
New South Wales
In NSW, it is usual process for conveyancers or lawyers to advise purchasers of the stamp duty amount, and to also process the duty on the purchaser’s behalf.
Unfortunately, unless you are buying an “off the plan” property and will be living in it after settlement, stamp duty must be paid within 3 months of the date of exchange (this is the date of the contract). This means that you will be required to have the funds available for the payment of stamp duty within 3 months of exchange, even if you are purchasing unregistered land (or an off the plan investment) that will not be ready for two years. If stamp duty is not paid within 3 months of the date of exchange, the State Revenue Office will charge interest on the unpaid stamp duty amount until such time that it is paid.
Purchasers can estimate the stamp duty payable prior to making an offer on the property by utilising the Revenue NSW calculator here.
Similar to NSW, conveyancers or lawyers dealing with QLD purchasers can advise on the stamp duty (transfer duty) amount and can also process the duty on the purchaser’s behalf.
In QLD however, transfer duty is usually not payable until settlement. This is because, in QLD, transfer duty is payable within 30 days of an “unconditional” contract. As most contracts are conditional upon an event occurring in QLD (for example, the contract being conditional upon the purchaser obtaining finance, or conditional upon the draft plans of subdivision being registered) the 30-day deadline to pay transfer duty starts once these conditions are met. In most conveyancing transactions, this means that transfer duty is not due and payable until settlement.
This extended due date of transfer duty then gives purchasers a plethora of finance options in relation to the payment of duty i.e. they can account for the duty in their application for finance, or, they can save whilst waiting for the land to register and can then draw from their own funds.
Further information in relation to transfer duty in QLD can be found here.