{"id":8949,"date":"2016-08-06T07:01:02","date_gmt":"2016-08-05T21:01:02","guid":{"rendered":"http:\/\/www.realestatetalk.com.au\/?p=8949"},"modified":"2016-08-06T07:01:02","modified_gmt":"2016-08-05T21:01:02","slug":"understanding-stamp-duty","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/understanding-stamp-duty\/","title":{"rendered":"Understanding Stamp Duty"},"content":{"rendered":"

 
\nStamp duty is one of those extra costs that is rather easy to forget when you\u2019re buying property but can really add up to your total cost. It is tempting to dismiss it when deciding what you\u2019re willing to pay for your next Investment property but don\u2019t fall into a trap. Depending on the property, or asset, you could be looking at tens of thousands of dollars in stamp duty to pay in quite a small timeframe.
\nOur greatest recommendation is to have stamp duty in mind when setting your budget. The more you\u2019re willing to pay for the Investment property, expect to pay more stamp duty on top of this. Knowing how much you can afford comes down to you doing your research.<\/strong>
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What is Stamp Duty?<\/h3>\n

To put it simply, stamp duty is a tax that you\u2019ll sometimes be required to pay on legal documents. You\u2019ll find stamp duty applied to a number of acquisitions including real estate, cars, shares and business assets or on contracted services
\n<\/a>such as loans, gifts and some insurance policies. Unfortunately, it\u2019s unavoidable so make sure you consider these charges when you\u2019re calculating the affordability of a purchase.
\nStamp duty is a state based tax and can vary vastly from state to state depending on purchase prices and what you are purchasing. Please see the overview below for the differences between the states and how much these can vary.<\/strong>
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Who Has to Pay It?<\/h3>\n

Depending on the transaction at hand, it may be the purchaser or the buyer who is required to pay the tax. In the case of property purchase, it is the buyer who is obligated to pay stamp duty. It is also important to remember that the stamp duty on Investment\u00a0property must be paid within 30 days of the settlement or else you may incur a penalty tax or interest<\/a>. If you\u2019re working with a solicitor or conveyancer, they will pay the stamp duty on your behalf but be sure to confirm this payment and ask for a duty statement for your own reference and peace of mind.
\nDepending on your lender and loan type, stamp duty may be included in the amount that you borrow. Regardless of whether or not you pay the money upfront or borrow it, you\u2019ll need to lodge relevant statutory forms with original documents, supporting information and of course payment. What you need to lodge in order to comply with stamp duty obligations is very much dependent on the relevant jurisdiction. Do your own research and talk to an industry professional to ensure you aren\u2019t leaving anything out. <\/strong>
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How Much Does It Cost?<\/h3>\n

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\nHow much you pay really depends on where you live and what your circumstances are. Generally, stamp duty will be calculated from the cost of the Investment property. The more you pay for the property or the more it\u2019s worth, whichever is higher, the more the stamp duty. Much like your taxable income, stamp duty is often determined on a sliding scale. Whichever threshold your property value falls under is the percentage you\u2019ll pay in tax.
\nIn Victoria<\/a> for example, the amount you\u2019ll pay on stamp duty starts at 1.4% for a $25,000 purchase all the way up to 5.5% for a purchase of $960,000 and above. Northern Territory doesn\u2019t follow this threshold system and instead employs a formula to work out the payable stamp duty. <\/strong>
\nThere are also a number of concessions that you may be eligible for depending on your circumstances. These also differ from state to state but include:<\/p>\n