Stamp duty is the stone in the shoe of every home owner. Considering its impact, it’s surprising how little we actually know about the tax, and more importantly how it can be reduced. Until now.

Basically stamp duty is a charge which is applied by state governments in Australia on transactions relating to the transfer of land or property, designed to cover the cost of the legal documents for the transaction. It is paid upfront and needs to be budgeted for in addition to your loan deposit.

The amount of stamp duty you are required to pay differs in each state, however there are three factors, along with the value of the property, that determine how much stamp duty you will pay. Contributing factors include:

Is the property the primary residence or an investment;
Whether or not you are a first home buyer; and
Is the property an established home, a new home or vacant land.

There are a number of stamp duty calculators available online that can take the guesswork out of budgeting for a property. Factoring in this additional cost cannot be overlooked when you are considering your capacity to repay a loan.

However, state governments have attempted to stimulate home ownership and growth, through a range of tax concessions available to reduce stamp duty. Again exact amounts differ across each state, but those who benefit the most are first home buyers and those opting to buy a new home.

A small note of caution: while some properties may attract a smaller stamp duty, this should not be the sole reason to buy/invest in this type of property. As any property purchase is a large financial commitment, the major factors regarding the type of property you purchase should be based on your personal/investment strategy needs, not trying to save some money on stamp duty.

If you would like further information regarding stamp duty or the basics of setting up an investment property portfolio, let’s have a chat!

Have and happy and safe Xmas and holiday season!

Michael