Buyers are always keen to find out how much stamp duty they will be paying – after all, stamp duty is often one of the biggest costs of buying a home.
Here, I’ll list the three main rates of stamp duty (also known as Transfer Duty), and explain how they may affect buyers*.
1. Residential rate
As the name suggests, the residential rate of duty applies to buyers of residential property. It applies to primary residences, rental properties and vacant land where building commences within five years, so it’s the most common rate we see in our office.
2. First home owner’s rate
Any buyer who is eligible for the first home owner grant and who is buying a home that is $430,000 or less (or vacant land that is $300,000 or less) does not need to pay stamp duty. Depending on the amount, buyers purchasing property over those thresholds will have to pay either a reduced rate of stamp duty or the full residential or general rate.
3. General rate
The general rate of duty is applied to many transactions (not all related to property), including non-residential land or commercial land. If a buyer purchases a block of land, this is the rate that will apply.
Often, people who buy land build a house on it within a few years of purchase, but some miss out on the residential rate they are entitled to. To claim the residential rate, owners of vacant land should make a claim for re-assessment with the Office of State Revenue within five years of purchase or within one year after building starts (whichever is later).
For buyers of vacant land, it pays to keep in mind that you are entitled to a reduced rate of duty once you build a home.
* Note: These are the three rates of duty we see most commonly, but other types of concessional rates also exist – see the Office of State Revenue‘s website for full details.
Image by Sarah Parrott via Flickr.