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First Home Buyer Stamp Duty
When buying your first home there are a lot of different costs to consider. While your focus may be on saving a sufficient deposit and finding out how much a lender will let you borrow, make sure you don’t forget about stamp duty.
Because stamp duty can be a significant upfront cost, it’s important that you factor it in to your total home-buying budget as soon as possible to avoid unnecessary financial headaches down the line.
Here’s how it’s calculated in different states and territories around Australia, and how discounts or concessions may provide stamp duty relief for first home buyers.
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What is Stamp Duty?
Stamp duty (also called ‘Transfer of land’ duty in some states) is a special tax collected by a state or territory government on certain acquisitions, including a sale or transfer of land.
Generally, the amount of stamp duty you have to pay depends on the price you paid for the property or its market value (whichever is greater).
What do First Home Buyers Need to Know About Stamp Duty?
Stamp duty is calculated differently depending on the state or territory in which the property is located, regardless of where the buyer resides at the time of purchase. For example, a Queenslander buying property in Tasmania will pay the Tasmanian stamp duty rate, not the Queensland rate.
Stamp duty is generally calculated according the value of the property – the greater the cost of the property, the more you can expect to pay in tax.
Can I pay off stamp duty with my mortgage?
You may be able to include the cost of stamp duty in your home loan – however, bear in mind that this will reduce the amount you have available to spend on your new home.
Also, don’t forget you may have to pay Lenders Mortgage Insurance (LMI) if you need to borrow more than 80% of the purchase price of the property, and that the amount you have to pay increases with your loan to value ratio. That means, people borrowing 95% of their property price may have to pay more LMI than those borrowing 85%.
So, even if you’ve saved a hefty deposit, adding stamp duty to your home loan could push you over the LMI threshold or increase the amount you have to pay.
Are first home buyers exempt from stamp duty?
Depending on the state or territory, first home buyers may be eligible for a stamp duty exemption or concession.
These may apply for:
A property valued under a particular amount.
• Vacant land.
• A new property.
• A substantially renovated property.
• Property in a certain location.
Each state and territory has different eligibility rules and discounts and may change the nature of these grants, exemptions and concessions from year to year.
A qualified mortgage broker will be able to tell you whether you are eligible for a first home buyers grant, exemption or concession, and how much you might get back.
Alternatively, you can check with your local Office of State Revenue:
- ACT Revenue Office
- NSW Office of State Revenue
- NT Department of Treasury and Finance
- Queensland Treasury
- Tasmanian Department of Treasury and Finance
- State Revenue Office Victoria
- WA Department of Finance
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