So, you’ve decided you’re going to buy a new house. You’ve come up with a budget, and have a good idea of what you can afford. But there’s a sneaky little cost that you may not have factored in… and that cost is stamp duty.
What is stamp duty, exactly? Stamp duty is a State Government tax on certain transactions. You’ve probably heard the term floating around not just in the real estate industry, but when you’re buying a car or taking out an insurance policy. It can come as a little sting if you’re not expecting or have not budgeted for it, and it scales according to certain measures including where you live, the type of transaction taking place, and overall value.
Stamp duty will come into effect when you purchase a property, and in most instances it must be paid to the state revenue office within 30 days of settlement.
How much stamp duty will I need to pay?
The amount of stamp duty you will be required to pay for a home varies depending on the situation. The best way to determine how much duty you need to pay is by using an online stamp duty calculator.
The amount of stamp duty you will need to pay also depends on a few other factors, including:
- Whether or not you are a first home buyer
- The property type (primary residence, investment property, etc.)
- Whether the property is established or new.
Things differ from state to state, too. For example, in New South Wales, stamp duty on a property is the same, regardless of whether or not it’s a primary residence or an investment property. In Queensland, however, an investor will be paying twice as much stamp duty for their property as they would an owner-occupied home.
Do first home buyers pay stamp duty?
When it comes to stamp duty concessions, there are a handful of situations in which you are not required to pay any stamp duty – and yes, if you’re buying a house for the first time, you will be entitled to first home buyer stamp duty concession. Concessions are also available to seniors, deceased estates, and homes with low value.
This doesn’t mean you’re entirely exempt from paying stamp duty, however. Depending on the state in which you live, your stamp duty concession may only be applied to a property valued at $550,000 or under. This means you’ll still have to factor stamp duty into your budget if you intend to purchase a home with a higher value.
In some cases, if you’re not entitled to a full stamp duty concession, you may still be able to take advantage of a reduced concession.
But what if you’re building a house? Stamp duty applies only to the value of the land, not the actual build of the home.
How To Reduce Stamp Duty
Although this may not apply to you as a first home buyer, if you’re looking at purchasing a second property for investment, or are looking to a property with a higher value, you can reduce the amount of stamp duty in the following ways:
- Purchase a cheaper property. Since stamp duty jumps considerably on a property priced at over $500,000, it may be worth shopping around for a cheaper home.
- Reduce the cost of your build. If you’re building your home (and it’s not your first home), a costly build will drive up the price of stamp duty. But by reducing the cost of your build, you could save quite a bit of money.
- Buy interstate. If you’re looking to purchase an investment property, look outside your borders – you could be up for significantly less stamp duty.
Purchasing a home may seem daunting, but at Domaine Homes, we’re here to help. Contact us today to see how we can help you build your ideal home sooner – and for less.