One of the big upfront costs involved in buying a house is stamp duty. What is it, why do you need to pay it and what discounts are available to you as a first-time buyer?
Buying a house is the largest transaction that most people will make and the sums involved mean that the amount of stamp duty payable can be a problem. But what is stamp duty? It is revenue levied by states on various types of transactions such as transfers and agreements for the sale of real estate (referred to as transfer duty), documented gifts, policies of insurance, mortgages, hire of goods (rental), and the transfer and issue of motor vehicle licences.
The amount of duty will vary depending on the value of the property you intend to buy, and is decided upon differently by the government of the state you’re buying in. Working out the amount you have to pay can become confusing due to the different approaches by each state. Beyond that, there are concessions for first-time buyers, different rates if you’re buying land and also sometimes a separate mortgage duty to pay.
Stamp duty is calculated by applying a sliding scale of taxation, depending on the value of your property. The general rule is that the cheaper the property, the less tax will be paid. Most states have a system that will slot your property into a value category ($100-200,000) and will ask for a lump sum plus an extra amount for every $100 over the lower end of the category (eg $100,000). See the table below for the current rates of duty.
Or click the link to access the NSW Office of State Revenue‘s Stamp Duty Calculator.