Stamp Duty

Stamp Duty

Stamp duty, or transfer duty as it’s sometimes referred to, is a state government tax that a buyer pays when they buy a house. Stamp duty on houses is charged on a sliding scale which differs depending on which state you’re buying in. Paying stamp duty when you buy a house is a tax that’s levied on most people purchasing property, so it’s an expense that you need to be prepared for when you are budgeting for the purchase of your new home.

Stamp Duty also applies to vacant land and commercial property purchases.

What is stamp duty in Australia used for?

Stamp duty on the purchase of properties is a tax that is levied by all states and territories in Australia. While there isn’t a fixed list of what stamp duty funds, it helps cover the cost of legal documentation required by governments for property ownership changes. Additionally, it supports various state and territory responsibilities, including emergency services, the justice department, roads and public health services.

How to calculate the stamp duty on buying a house

When you’re considering the purchase of a home or investment property it’s always best to know how to work out what the cost of your stamp duty will be. You can use basic formulas to calculate stamp duty on houses you’re looking to buy which should be adapted depending on which state the property is located.

There are plenty of stamp duty calculators available online to help you calculate this additional expense quickly and easily.

The Office of State Revenue WA website has calculators online for all sorts of stamp duty and lax tax calculations. You can go to their website here: https://apps.osr.wa.gov.au/portal/0/home

Exemptions from stamp duty in Australia

In Australia, there’s some situations in which you may be exempt from paying stamp duty on your purchase or times you can apply for a reduced stamp duty rate. This applies if you are a first home buyer.

When does the payment of stamp duty occur?

Just as the stamp duty rates vary from state to state, so does the point in the property purchase at which you are required to pay stamp duty on houses.

In Western Australia, stamp duty is due to be paid before or at settlement. However if the property is an off the plan type property where you are waiting for titles to issue, you may have to pay it within 2 years if construction has not yet quite finished in the development.

How to arrange payment of stamp duty on buying a house

If you’re using the services of a licensed settlement agent for the settlement of your new property, the calculation and payment of stamp duty is normally included in their services. Usual practice is that our conveyancer will collect the money from you or your bank on or before settlement. Although you need to ensure that you have the money for stamp duty payment, your conveyancer will take care of the actual payment for you.

The future of stamp duty in Australia

Most of us wonder what the stamp duty is used for and why it exists. Charging stamp duty on buying a house is part of an old taxation law that dates back to the time when the transfer of property records was a labour-intensive process. These days, there is significantly less for your government to do when it comes to the transfer of property ownership because everything has been digitised and records are largely up to date across the country.

Recently, certain states have proposed changes to the payment of stamp duty which is a sign there may soon be adjustments to how this tax is imposed on property purchases in Australia. For the most up to date information on paying stamp duty in WA and Australia, you should discuss the current situation with your conveyancer when you’re looking to purchase a property. For Western Australia, you can visit the Department of Finances website for further information.

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