What is Stamp Duty?
Stamp duty (also called Transfer Duty) in a purchase of real estate is a state-imposed tax when you transfer the ownership on the Title Deed, i.e. transferring the ownership of the property from the previous owner to you as the new owner.
You can calculate your stamp duty using the Revenue NSW online calculator on their website.
Generally speaking as of 1 July 2021, a property purchased for $1,000,000 will incur stamp duty of $40,207.00 (assuming it is not a new home, new buyer or eligible for any other grants).
When Should I Pay Stamp Duty?
For purchases, stamp duty is payable within 3 months from the signing of the Contract at exchange. However off the plan properties have up to 12 months to pay stamp duty.
The general practice is for stamp duty to be paid at settlement of the purchase. In the PEXA online workspace, there will be a payment direction to Revenue NSW for stamp duty. Therefore in addition to the purchase price, the purchaser will also need to budget for the payment of stamp duty which can be quite substantial. Please be mindful of including stamp duty in your calculations when you are enquiring about a loan to purchase a property.
Exemptions and Grants
You could be eligible for a full or partial exemption from stamp duty or grants if you are a first home buyer, first home owner, building a new home and meet all the other requirements by Revenue NSW. Check the Revenue NSW website for more information on eligibility. Speak to your lawyer or mortgage broker about the exemptions and grants and whether you are eligible to access the benefits.
Surcharge Purchaser Duty
If you are a foreign person purchasing real estate in NSW, you will be subject to surcharge purchaser duty which is an additional duty payable. Surcharge Purchaser Duty is 8% of the purchase price.
You are a foreign person unless you are:
an Australian citizen
have lived in Australia for more than 200 days in the 12 months before the purchase date, and you're:
a New Zealand Citizen, who holds a subclass 444 visa or
a permanent resident of Australia.
The surcharge purchaser duty is also applicable to other types of transactions involving land transferred to a foreign person.
Other Types of Transactions
There is stamp duty payable for other types of transactions including but not limited to the following:
Buying a business that includes land
Establishing a trust over property
transferring an option to purchase land
foreclosing a mortgage on a property
purchasing shares in an unlisted company
In a deceased estate matter, the transfer of assets from the estate to a beneficiary will incur nominal stamp duty of $50 (as of 1 July 2021). This is a concessional rate only for deceased estate matters.
The transfer of properties between spouses/ de facto partners arising from a family law property settlement is exempt from stamp duty. The parties will need to complete and submit a form called an Application for Exemption or Refund - Break-Up of a Marriage or De Facto Relationship. However if the spouses/ de facto partners sell a property to a third party entity then that transaction will incur the normal stamp duty payable by the third party.
Another exemption to stamp duty is for transfers of a residential property or vacant land intended to be the family home between parties of a marriage or de facto relationship (must be 2 years). The parties must hold the property equally.
The above information is based on NSW properties and in the NSW jurisdiction.
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*** Disclaimer:
Information on this website or post does not constitute legal advice and that electronic dialogue with readers does not constitute any form of client engagement unless specifically agreed.
The information is provided on a general basis only. We strongly recommend that you seek your own independent advice from a lawyer about your situation.
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