Whether you're selling or buying a house in the near future, there are some specific parts of the buying process that the everyday person may not know the details of. One great example includes the ins and outs of stamp duty. What is it? Why does it exist? How much is it?
If you have ever thought about these questions regarding stamp duty, you are not alone. This article can act as your go-to basic guide to a solid understanding before you venture into the world of real estate.
Stamp duty is sometimes referred to as transfer duty, which describes the process a little more clearly. To put it simply, stamp duty is a tax charged by the Queensland government when a property is sold or transferred to a new homeowner during a dutiable transaction. This tax only applies to one party and in this case, it's paid by the person who buys the property.
Stamp duty is important to be aware of because it involves a considerable amount of money and you should be prepared to pay it when you buy a piece of residential property or a house. On top of just saving for a down payment, deposit or paying your mortgage, you should also put away some money for the upcoming stamp duty. The Queensland government will take a specific percentage of the cost of the property during the settlement for state revenue.
Stamp duty is something that applies in every state in Australia, and Queensland is no different. It is important to know that every tax will be different depending on the house.
So, how do you know how much money to save for your particular stamp duty? The truth is that there is no one answer and the duty rate can vary. Stamp duty takes into account the dutiable value of the property and whether or not the buyer is a foreign purchaser. If you have a general idea about the purchase price range you are looking at, then you can save from there.
Before you pay your stamp duty, there is a chance that it may not apply in some circumstances, called stamp duty exemptions. This is what is known as a stamp duty concession. Here are the cases that you may qualify:
There is also the chance that you qualify for a reduced stamp duty amount, up to $7,175, as a home concession. Before getting started with the home buying process, it is always recommended to check and see if you qualify for no- or reduced-stamp duty. If you are unsure where to start, you should contact your real estate agent for guidance.
Now it's time to get into the nitty-gritty of what the cost of stamp duty is. As we've mentioned before, because stamp duty is essentially a land tax, the amount varies depending on several different factors. It operates on a sliding scale, so the more you pay for the property, the more you will have to pay for the stamp duty.
Despite this, stamp duty also depends on what you plan to do with the residential land or house that you just bought. You will have to report to the state government your intent with the dutiable property purchase, and then they will charge the transfer fee from there during the settlement.
Note that an investment property almost always has to pay the typical stamp duty amount. However, the previously mentioned concessions can only apply to owner-occupier situations. To find out how much your stamp duty may cost there is a mathematical formula that you can follow to determine the amount.
According to the Queensland government:
Whether it's a commercial property or a new home, stamp duty is a serious consideration that you need to evaluate when buying real estate.
If you're still feeling slightly overwhelmed about how stamp duty impacts your buying journey, don't worry. There are professionals in your corner who are ready to help you and make sure that you are successful. They spent every day thinking about things like closing costs and transfer duties and will be happy to answer any questions that you may have.
When you work with a real estate agent who's always trying to get you the best possible price on a home and find a fair purchase number, the impacts will bleed into the rest of the process. For example, a better home price means a smaller stamp duty in the long run.
If you want to consult with a professional armed with some basic information, you can use a Queensland stamp duty calculator. The tool will ask you some basic questions and help give you a general idea of what the tax could be. However, your real estate agent may give you a more accurate estimate based on the personal details of your home buying process.
Being prepared is so important when purchasing a home or any other sizable investment. Having experienced professionals on your side is a huge benefit and there are none better than Ray White Surfers Paradise. If you're ready to get started, reach out today.