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Understanding Stamp Duty: What Every First-Time Buyer Needs to Know

Buying property in Australia comes with plenty of tax implications to navigate and understand. 

Purchasing property can certainly afford an investor with plenty of tax benefits. But there are also plenty of expensive tax costs to consider as well.

Stamp duty is one of those costs.

Anybody looking to buy their first property will need to understand stamp duty. 

In this stamp duty guide, we’ll take an in-depth look at what it is, why stamp duty is charged and to whom, and other critical pieces of stamp duty advice.

What is stamp duty?

Stamp duty is a tax imposed when buying and transferring property, as well when purchasing shares in a company that owns property. 

This is a state-based tax, meaning the amount of stamp duty varies between the different states and territories.

Usually, stamp duty must be paid within 30 days of signing a contract, or 30 days from settlement.

When it comes to the rules of paying stamp duty, it’s best to do some research on the particular regulations of that state and territory, as certain requirements may vary depending on where you purchase. 

How much stamp duty is paid on a property?

Other than the rate set by the state or territory you are buying in, there are some other factors which may impact the amount paid. 

Other variables which affect how much you’ll pay in stamp duty include the property’s value, the buyer’s individual circumstances (we’ll look at this a bit more below), and the property type (differences depending on whether the property is residential or commercial).

Why do I need to pay stamp duty?


In understanding stamp duty, it’s important to know why stamp duty exists in Australia. 

This tax is designed to generate revenue for the state or territory where the property is purchased.

This revenue generated from this stamp duty contributes to various sectors, such as health, transport and emergency services. 

Is anyone exempt from paying stamp duty?

As previously mentioned, the regulations around stamp duty will largely vary across various states and territories. 

However, some states do offer first time buyer stamp duty exemptions. This is to encourage first-time buyers to enter the market, making it easier to purchase that first home.

For example, first-time buyers in New South Wales may be eligible for a complete exemption on newly built homes (of a value up to $800,000).

Queensland first home buyers can get concessions for properties valued less than $500,000.

In Victoria pensioners are exempt from paying stamp duty if their property is valued up to $330,000, while first-time buyers will only have to pay stamp duty if the property is valued over $600,000.

How can I manage stamp duty?

Now that stamp duty has been explained, here are some quick tips on how to manage stamp duty in Australia:

  1. Understanding the specific rates and thresholds: as discussed Different states and territories have varying rates and thresholds for stamp duty.
    It’s crucial to know these specific details as they will directly impact your budget for purchasing property.  
  2. Proper budgeting and planning: Stamp duty can be a hefty price to pay when purchasing property. 
    It’s really important to create a budget that factors in this stamp duty and stick to this when looking at property prices. 
  3. Payment timing: As mentioned, stamp duty will need to be paid within a specified timeframe from date of purchase.
    You will need to ensure you have the available funds to pay this expense at the time it is due to avoid paying any fees or penalty costs associated with late payment.
  4. Seeking help from the professionals: As stamp duty can be a bit complicated and vary across each state and territory, it may be worth considering advice from an experienced conveyancer, solicitor, or accountant who specialises in property transactions. 
    A great tip to finding an expert is to find out whether they have invested in property themselves.
    A good advisor will be able to provide tailored guidance to your specific situation and ensure compliance with all legal requirements.
  5. Stamp duty isn’t the only cost: When budgeting for a property purchase, stamp duty is just one of the costs you’ll need to consider.
    Legal fees, inspection costs, and moving expenses can all quickly add up. This approach will assist you in avoiding any financial surprises. 

Remember, knowing what stamp duty is on a house is just one part of the puzzle.

Knowing how to manage, and even lower that amount is key to maximising profit on the purchase of a property.

For more on how to reduce property tax, check out the video below!

PK Gupta
Published: 22 Jun 2024


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