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What Is Stamp Duty?

What Is Stamp Duty?

What is stamp duty?
Stamp duty is a tax. It’s applied to several transactions:

  • motor vehicle registration and transfers
  • insurance policies
  • leases and mortgages
  • hire purchase agreements
  • transfers of property (such as businesses, real estate or certain shares).

The value of stamp duty varies according to the type and value of the transaction involved.

Where does stamp duty go?
Stamp duty is invested into the economy by the state and territory governments which collect it. The money is used to pay for various government services:

  • Health services
  • Roads and transport
  • Police
  • Justice
  • Emergency services
  • Education and training
  • Human services
  • Environmental services

Regarding stamp duty to do with the sale of land/property, the amount paid varies per state. Find out if stamp duty is included in the sale price of the property. If it is not, you will need to calculate the cost of stamp duty in your location and add it to the price of the home.

When is stamp duty payable?
In NSW, the purchaser becomes liable for stamp duty when the transaction or sale is finalised, and contracts are either exchanged or completed. When purchasing property (with or without a loan) stamp duty must be paid within 3 months of settlement.

Stamp duty exceptions and concessions: are you eligible?
There are cases where a concession or exemption to stamp duty can apply. A concession is a reduced rate, while an exemption allows you to purchase a property without paying stamp duty.
The rules vary, but in general, a stamp duty concession or exemption applies to a variety of circumstances:

  • In some locations, homes below a certain value are exempted from stamp duty
  • Pensioners and health card holders may be eligible for a concession or exemption
  • First home buyers may be exempt from stamp duty in some states
  • Inter-generational transfers of land within a family may not attract stamp duty
  • Off-the-plan sales are sometimes exempted from stamp duty

These are general cases where a concession or exemption from stamp duty may apply. However, to be certain, check with the authorities in your state or territory.

Stamp Duty NSW – Rates
Below is the table of NSW Stamp Duty rates for an Owner Occupied or Investment purchase (as of 1 July 2019):

Value of property Rate of duty
$0 – $14,000 $1.25 for every $100 or part of the dutiable value
$14,001 – $30,000 $175 plus $1.50 for every $100 or part , by which the dutiable value exceeds $14,000
$30,001 – $81,000 $415 plus $1.75 for every $100 or part, by which the dutiable value exceeds $30,000
$81,001 – $304,000 $1,307 plus $3.50 for every $100 or part, by which the dutiable value exceeds $81,000
$304,001 – $1,013,000 $9,112 plus $4.50 for every $100 or part, by which the dutiable value exceeds $304,000
over $1,013,000 $41,017 plus $5.50 for every $100 or part, by which the dutiable value exceeds $1,013,000
over $3,040,000 $152,502 plus $7.00 for every $100 or part, by which the dutiable value of the residential property exceeds $3,040,000.

 

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