- by Tim Nimmo
Stamp duty is impossible to avoid and needs to be calculated into every property purchase you make, so here’s a brief introduction…
It’s essentially a tax imposed on certain written documents and transactions, including property, by Australia’s states and territories with the size of the tax varying from state to state. Its name also varies with transfer duty or general duty being used in some states. The tax includes both a lump sum payment as well as a percentage of your property’s value, the percentage being applied only to the amount that exceeds the lower end of the bracket into which the purchase price falls.
Since that may sound confusing let’s have a look at an example, if you were to purchase an investment property in Sydney for $700k your purchase would land in the $300,001 – $1 million bracket. This bracket incurs an immediate $8,990 lump sum, as well as 4.5% tax on every dollar by which it exceeds $300,000. So in this case you would be paying $26,990 in stamp duty, which rises to a total of $27,267.60 when you add a few further fees that come included. But if you’re still confused the good news is that you can simply refer to a good stamp duty calculator, such as the one found here which takes all necessary factors into account.
It’s not hard to see that stamp duty is a significant burden on investors and home buyers with the amount spent on stamp duty across Australia between 2015-16 rising above $20 billion (see here for more information). Also with stamp duty rising three times as fast as housing prices over the last 35 years, as noted in the previous link, many investors are looking for strategies to alleviate the burden. Of which we have insight into, so if you’d like to know more then don’t hesitate to talk to us today, just call 1300 883 920.