What is stamp duty

What is stamp duty?

In the housing and property market, a common term used is stamp duty, but it’s surprising how many people aren’t aware of stamp duty, or how it works. For many people stamp duty can be the biggest additional cost.

Stamp duty is tax that state and territory governments charge for processing certain ownership documents and transactions, like the purchase of your home. The value of the property, or land, you’re purchasing determines how much stamp duty you will pay – a general rule is the higher the property price, the more stamp duty you’ll pay.

The homebuyer is solely responsible for paying stamp duty – not the seller – with the payment process managed through your settlement agent.

There are a few various rates stamp duty is charged at so it’s important to understand which one is relevant to your property purchase. In Western Australia the following rates apply;

General rate

For commercial and rural properties not being used as residential properties. Also applicable to vacant land that doesn’t qualify for the residential rates.

Residential rate

Applies to places of residence, rental homes and land which will be built on within five years from date of purchase. Also applicable to mixed use properties.

Concession rates

Available to owner occupiers and WA business assets where the value of the entire property is less than $200,000.

First homeowner rate

If eligible, first home buyers can take advantage of discounted stamp duty rates that may be available at the time of purchasing their first home. The rates and offers available often change so it’s important to check the government websites or talk to your mortgage broker for the most up to date information.

As a first home buyer you may also be eligible for a number of government grants. In Western Australia, the First Homeowners Grant (FHOG) is currently $10,000 and only available on properties with a purchase prices under $750,000. The grant is not available for the purchase of an established home or for renovations to an existing home.

Foreign transfer duty

An additional duty also general applies on acquisitions of residential property by foreign persons. This is currently 7%.

Transfer duty rates in Western Australia as of March 2020

Grid with selling/buying price of property in column A and then rough stamp duty estimate in column B.

 

(Duties Act 2008, Chapter 2)

 

Want to calculate the estimated duty you will pay when making your property purchase?

Calculate here!

Reminder that there are other costs involved in buying home besides stamp duty. Conveyancing, insurance, council rate adjustments, building and pest inspections, government registration fees… get in touch with us to talk through all the costs associated and so we can help you find the best options that take advantage of any discounted rates and grants available for your situation.