When it comes to buying or selling property in Australia, there’s an expense you need to know about. Stamp duty, also known as transfer duty, is a significant factor influencing a property buyer’s journey in the real estate market. Understanding the basics of this concept is crucial for anyone involved in property transactions, whether you’re a first-time homebuyer, seller or real estate investor in Australia. 

In this article, we answer some commonly asked questions about stamp duty, explaining what it is and why it matters.

What Is Stamp Duty?

Stamp duty, or transfer duty, is an expense applied by state governments in Australia on transactions relating to the transfer of land or property. It requires you to make an upfront payment in addition to your loan deposit when purchasing a home.

How Is it Calculated?

Transfer duty is calculated based on a percentage of a property’s value and changes based on which state you reside. Each year, the threshold amounts for standard transfer duty and premium duty rates are adjusted in line with movements in the Sydney Consumer Price Index (CPI) for properties within NSW.

How Much Stamp Duty Do I Have To Pay?

The amount you must pay differs in each state. However, many factors, such as the property’s value, determine how much you need to pay. Other contributing factors include: 

  • Whether or not you are a first home buyer
  • Whether or not the property is a primary residence or investment property
  • If you are purchasing an established home, a new home or vacant land

This additional cost is essential when considering the purchase of a property. View our stamp duty calculator to calculate how much you will spend. 

What Happens if I Am a First Home Buyer?

If you are a first home buyer, you may be entitled to a government subsidy that negates the expense you would otherwise be required to pay. For NSW residents, first home buyers can purchase a property valued at up to $800,000 without paying stamp duty. You may be entitled to a concessional rate on purchases of homes between $800,000 and $1 million.

The Takeaway

Understanding stamp duty is crucial for navigating the Australian real estate market. For expert guidance on your financial journey to homeownership, contact our team at Simplify Finance or book a call with us. We’re here to help you make informed decisions and simplify the complexities of the property market.