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Transfer (Stamp) Duty Basics
March 17th, 2014

There is nothing that can suck the happiness out of your real estate purchase more than receiving that hefty stamp duty bill.

That said, transfer duty is a basic fact of real estate you simply cannot avoid. So if you’re looking to buy, or are simply interested, here’s everything you need to know about that extra tax.

What is stamp or transfer duty?

Transfer duty, formally known as stamp duty, is a general tax imposed on the transfer of certain legal instruments (written documents) and transactions. The most common forms of payable duty in Australia include real estate (leases, mortgages and sales) and vehicle (registration and transfer) transactions. It can be also tagged on to documents regarding business assets, trust acquisitions and surrenders, insurance policies, as well as hire purchase agreements.

In Australia, transfer duty is not a federally levied tax meaning that the costs and services associated with the duty are handled individually by each state and territory government.  What’s important to note is that stamp duty rates differ between states, as does the type of the transaction subject to the duty.

As the original name suggests, the historic reasoning behind transfer duty was to cover the administrative costs associated with actually stamping and filing legal transactions.  However, with the introduction of electronic services, this is no longer the case (hence the name change).  Nowadays, much of the revenue from transfer duty is combined with other state taxes to pay for infrastructure, education schemes and other societal benefits.

How is it calculated?

In regards to property documents, most states and territories calculate transfer duty fees based on a linear taxation scale. Generally speaking, this scale takes into account the greater of two factors: the value of the property or the price paid for the property (including GST). As a general rule of thumb, the price of transfer duty rises with the price or value of the property.

When must transfer duty be paid?

For property transactions, it is a legal requirement for transfer duty to be paid within 30 days  (or up to three months in some states) following settlement date. Once the transfer duty is paid in full, the corresponding documents become effective.

Most lenders will offer the option to pay for any transfer duty costs on behalf of their client, by adding the amount to the principal loan. This is only applicable however under certain loan conditions. Consult your lender for more information.

In most states and territories of Australia, if the transfer duty is not paid by the due date, a final demand is issued to the liable party. If the service continues to remain unpaid, then all parties noted in the transaction are informed. Legal proceedings against all parties may then follow until the debt is claimed.

Who pays transfer duty?

All parties entering a taxable transaction are liable to pay transfer duty. In terms of real estate, the purchaser is responsible for the stamp duty costs.

All transfer duty payments are made directly to the state governments. Like other transactions, payment can be made in person, via mail, or electronically using BPAY, Paypal or the likes.

There are certain concessions or exemptions emplaced in each state that can reduce the amount of payable duty. Some of these include:

  • First home buyers (subject to certain conditions)
  • Concession card holders (subject to certain conditions)
  • Residential leases

Want more information?

If you’re after more information regarding property stamp duty rates in your state, click below.

Queensland

New South Wales

Victoria

Tasmania

Tasmania (Duty Calculator)

South Australia

Western Australia

Australian Capital Territory

Northern Territory

CBS Property Group

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