How much does stamp duty cost you?

How much stamp duty does your state expect you to pay when you purchase a new property? You might be surprised to learn how much of a difference this tax can make to the purchase price of a home. Let’s take a look at this notorious financial cost, and how you can reduce the damage to your bank account because of it.

How much stamp duty will I need to pay?

The amount of stamp duty you’ll need to pay will differ depending on which state of Australia you’re in. Buying property in New South Wales, for example, results in a far lower stamp duty when compared to a similar property in Victoria. You could jump across state lines and suddenly save thousands of dollars on the total price of your new home. Furthermore, each state distributes these costs differently: A Queensland property’s base stamp duty is likely to be far less than a similarly valued property in the Northern Territories, but the transfer fee in Queensland is four times larger.

It’s the people in South Australia, however, that will be cursing stamp duty the most, as it is here that it is the most expensive. A $400,000 home in SA would also come with close to $20,000 worth of government fees, the majority of which are stamp duty. Tack on the deposit as well, and suddenly people who want to purchase a moderately priced home now have to pony up a total of $100,000.

Another thing to keep in mind is the property value effect. That $400,000 home in South Australia would be just under the average value for Adelaide – but you’d be hard-pressed to find any property in Sydney that was at that value. When you start comparing apples to apples, or rather medians to medians, the stamp duty burden becomes quite a different story. A median-valued home in Hobart (as reported by CoreLogic RP Data) would be about $365,000 and include a stamp duty of about $12,500. The median-valued home in Sydney, which now sits at $1,056,000, would have an eye-watering stamp duty of $42,705. 

As a result, the differences in prices between the capital cities isn’t just a result of the baseline property value – it’s the stamp duty too.

What kind of concessions are available?

As you can see, stamp duty can be a significant impost on your ability to purchase a home. But there are ways to reduce to even eliminate these costs, depending on where in Australia you are.

The Northern Territory, for example, grants first home buyers a full concession on stamp duty that could shave almost $24,000 off the property purchase processing fee. Other states have similar rules for first home buyers, though the values and exact specifications vary. Furthermore, some states have additional concessions for people who choose to build their own home rather than buy one, regardless of whether they are a first home buyer: a useful bit of saving for those who decide to purchase a home off the plan.

All up, these kinds of concessions or reductions could save you a great deal of money. Make sure to check with your state government to see if you are eligible for them.

Stamp duty, for the time being, is an unfortunate fact of life for property buyers in Australia. But with the right help and the right purchase, you can cut down those costs – or at the very least, choose a home that makes the additional costs worth it. For more information, get in touch with the team at Elders Home Loans to find out how stamp duty effects you or use the Elders Home Loans calculators.

 


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