When you buy a property in New South Wales, you’ll be expected to account for stamp duty, which can often represent a relatively expensive cost. Still, the rules can be a little complex, and certain people may qualify for a discount or exemption, and there are points to remember if you’re buying your first home. So, what do you need to know about NSW stamp duty?
Stamp duty is officially called transfer duty by the government. Whatever name they use, this is basically a tax that applies to the buyer of the property rather than the seller and is generated when property ownership passes from one entity to another.
But how do you calculate the amount? This tax is applied on a sliding scale, so you pay more stamp duty as the price of the property increases. The stamp duty can be applied to either the listed sale price or the current market value, whichever one of these is higher. Also, if the property is worth more than $3 million, it will attract a “premium” stamp duty rate. There’s a handy calculator that can help you work out how to calculate stamp duty in NSW.
The state government has a policy of helping new homeowners as they put their foot on the first rung of the property ladder. Consequently, you can get a stamp duty exemption on a property valued up to $650,000 if it is your first home. If the property is worth more than that, then a concessional rate will apply. It is worth noting that these concessions apply to the purchase of existing homes as well as a brand-new construction or even vacant land upon which you would build your home.
If you want to qualify for the state’s First Home Buyer Assistance Program and therefore be exempt from paying stamp duty, you must be at least 18 years old and are purchasing the whole property. You cannot have owned any residential property in Australia before or received a concession or exemption under the scheme in the past. The property must be bought as an individual rather than as a trust or company, and you must also be either a permanent resident or an Australian citizen. Importantly, you must intend to occupy the home as a principal place of residence for at least six months and do so within 12 months of completing the purchase.
If you’re buying a home as part of an “off the plan” purchase and intend to live in the property rather than use it as an investment, you have the option to defer payment of stamp duty for up to one year. This is designed to help people who may have to meet additional costs associated with purchasing a newly constructed home.
Stamp duty is typically paid on the day of settlement. A conveyancer or a solicitor usually handles it, but it is possible to pay it yourself online. In most cases, the duty will need to be settled within three months of signing the contract, but not in the case of an off-the-plan purchase as detailed above. You can pay the stamp duty yourself online if settlement does not take place before the date that the stamp duty is due.
Bear in mind that other transactions may attract stamp duty, including purchasing shares in an unlisted NSW company, establishing a trust over a property in the state, or transferring an option to purchase land in NSW.
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