If you’re looking to buy a home or investment property in Australia you’ve probably heard people talk about stamp duty, which is a tax State Governments across the country charge when buying real estate.
Like the old saying goes, there are only two things certain in life – death and taxes. While we can’t do anything about the former (not as mortgage brokers anyway), Australians can educate themselves on how stamp duty works, as there may be ways to reduce how much you pay.
So how much is it?
Let’s start by understanding how much stamp duty is likely to cost, which varies significantly depending on the state you are buying in and the price of the property you purchase.
For example, in Victoria the Stamp Duty (also called Land Transfer Tax) rates payable range from 1.4% to 6.5% depending on the value of the property, although most properties these days fall in either the 6% range (>$130,000 to $960,000) or 5.5% range (>$960,000 to $2m)
However, this differs from New South Wales and is different again in Queensland, as each State Government makes its own rules on Stamp Duty.
An example of how Stamp Duty is calculated and what that means to the cost of buying a property can be found in the table below. This example is based on someone wanting to buy a home to live in (called their Principle Place of Residence – PPR) and a purchase price of $900,000.
| VICTORIA | NEW SOUTH WALES | QUEENSLAND | SOUTH AUSTRALIA |
| Stamp Duty: $2870 plus 6% of the dutiable value over $130,000 | Stamp Duty: $10,909 plus 4.5% of the dutiable value over $364,000 | Stamp Duty: $10,150 plus 4.5% of the dutiable value over $540,000 | Stamp Duty: $21,330 plus 5.5% of the dutiable value over $500,000 |
Calculation: $900,000 minus $130,000 x 6% + $2870 | Calculation: $900,000 minus $364,000 x 4.5% + $10,909 | Calculation: $900,000 minus $540,000 x 4.5% + $10,150 | Calculation: $900,000 minus $500,000 x 5.5% + $21,330 |
Total Stamp Duty: $49,070 | Total Stamp Duty: $35,029 | Total Stamp Duty: $26,350 | Total Stamp Duty: $43,330 |
As you can see, Stamp Duty can be a significant amount of money on property in Australia, and often this amount is added to the value of your loan (given most people don’t have the sort of cash in loose change).
It’s also worth noting that the rates of Stamp Duty change on a regular basis – the above calculation for New South Wales came into effect on 1st July 2024 for example – so it’s worth checking with your mortgage broker to see if the rules in your region have changed recently (or are about to).
If you would like to check out the stamp duty for different states and at different price points, we recommend that you check out our stamp duty calculator.
Concessions Available
Stamp duty can be a significant cost but there are some exceptions to the rule with State Governments providing exemptions and concessions for eligible buyers.
Concessions for first home buyers
In some states, a first home buyer can be exempt from paying stamp duty entirely and receive further concessions. This differs from state-to-state. See table below.
| Victoria | New South Wales | Queensland | South Australia |
| Dwelling or land up to $600,000 – Exempt | A dwelling up to $800,000 -Exempt | Dwelling up to $700,000 – Exempt | New home or vacant land at any value – Exempt |
| Dwelling or land $600,001 – $750,000 – Concession | A dwelling > $800,000 and < $1 Million – Concessional rate | Dwelling $700,001 – $800,000 – Concession | No further discounts of concessions |
| Vacant land has the same rules as an established property, so long as you build within 12 month | Vacant land up to $350,000 – Exempt | Land up to $350,000 – Exempt | |
| Vacant land > $350,000 and < $450,000 – Concessional rate | Land $350,001 – $500,000 – Concession |
Reference:
https://www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/assistance-scheme.
https://qro.qld.gov.au/duties/transfer-duty/calculate/concession-rates/
South Australia announced earlier this year that the state budget had removed the property value cap for stamp duty relief for eligible first home buyers who purchased a new home or vacant land. This is a significant offer specifically for those residing in South Australia.
However, there are no concessions provided for first home buyers purchasing an established home. You can learn more here.
As you can see from the table above, the options vary from state to state and are dependent on multiple factors including the price of the property and whether it is new, established or vacant land.
Off-the-plan duty concession – Victoria
Another way to significantly reduce the stamp duty you pay is to consider buying off-the-plan. When you buy a home or apartment before building has commenced, you are eligible for off-the-plan duty concession.
What this means is you pay stamp duty on the difference between what you pay for the property and the contracted price.
For example, say you purchase a house off plan for $800,000 before construction has started. You’re informed the contract price spent constructing the house will be $450,000. This means you will pay stamp duty on $350,000 (800,000 – 650,000) instead of the full $800,000. However, under the first home buyer duty exemption for property’s less than $600,000 you won’t need to pay any stamp duty.
There are a number of eligibility criteria to qualify for this concession including living in the home for 12 months after purchase, qualifying for First Home Owner Grant and qualifying for first home buyer duty exemption or concession. You can learn more here or simply speak to Loanscope to run through your options.
With all the varying state offers of exemptions, discounts and concessions with different rules and restrictions, understanding what you need to pay can get confusing.
Let’s look at a few case studies from some of our clients to bring this to life for you.
Case Study 1:
Sometimes we buy property with our loved ones and unfortunately, it doesn’t work out. It happens. This can be an unsettling time, and navigating property is an added stress to an already unfortunate time in our lives. This is what happened to one of our clients.
He’d purchased a property with his wife and when they broke up, he didn’t know what to do about their home. What options were available to him?
He got in touch with us and we were able to help him buy out his wife’s share of the property and waive the stamp duty. This was made possible because he qualified for the Marriage breakdown exemption.
His property was worth $1,050,000, so by buying it out, he was not required to pay stamp duty again on a million-dollar property which is $57,750.
Adding on to this example, he saved on LMI and the interest rate because the $57,750 would have meant that his LVR was 85%. LMI would have been about $14k and interest rate would have been higher too.
Comparison:
Proceeding with a Loanscope broker
Loan amount $835k
LMI – $0
Interest rate – 6.14%
Monthly repayment – $5,100
Not getting the right stamp duty advice
Loan amount (before LMI) $892k
LMI – 14k
Total loan amount – 906k
Interest rate – 6.49%
Monthly repayment – $5,723
Case Study 2:
There are moments when we want to buy an investment property and start bringing in a passive income. But how do we do this and take advantage of the first time home buyer scheme? What options are available to us? These were just some of the questions racing through our clients mind when they reached out to us for help.
The client approached us about purchasing an investment property for under $600k. We explained that if he bought the property as a principal place of residence for a year, he could waive the stamp duty costs and bring down the monthly repayments. Following the 12 months, he could then convert the property into an investment afterwards and collect rental income.
The client wanted to purchase an investment property as his goal was to live with her parents for 5 years before buying a principal place of residence.
Property price $500k
Deposit $90k
Purchasing as an OO, qualified for the First Home Buyer Scheme saving on LMI ($6k) and Stamp duty ($21,970k)
Scenario with a Loanscope broker
Loan amount – $415k
Interest rate – 6.19%
Monthly repayment – $2,560
Scenario purchasing as an Investment Property
Loan amount – $437k
LMI – $6k
Total loan amount – $443k
Interest rate – 6.92%
Monthly repayment – $2,922
Here at Loanscope, it’s our job to provide all the options to our clients to ensure they make an informed decision. The market is continually changing, and we take pride in staying abreast of the latest developments and sharing this with our clients.
We make sure every single client understands their entitlements and cash requirements before entering into any agreement.
If you’d like to learn more about stamp duty exemptions and concessions or speak to an advisor for tailored advice, simply contact us today. We’re here to help you get the best deal possible.
