*This article first appeared in the September 2019 Midland Express
Stamp duty is part and parcel of buying a property in Australia, something that varies state to state, and something that few buyers understand.
So, what is stamp duty? In short, stamp duty is a form of tax. It is applied to a number of transactions, including transfers of property, mortgages as well as motor vehicle registrations. Stamp duty can also be called transfer duty or general duty.
This transaction of stamp duty is charged based on a percentage amount based on the greater of the market value of the property or the price paid, including any GST. This means, the more expensive the property, the higher the stamp duty.
State governments offer stamp duty exemptions when a property changes hands following a death or divorce or is transferred between family members.
In Victoria, the state government offers a full exemption to first-home buyers who purchase a new or established home worth up to $600,000, as long as they live in the property for at least 12 months, as well as stamp duty discounts to those who buy a property valued between $600,000 and $750,000.
If you are a pensioner, you may be eligible for a one-off exemption from duty when you buy a home valued at $330,000 or less, or a concession from duty when you buy a home valued from $330,001 to $750,000.
The State Revenue Office provides an online calculator which can assist you in understanding eligibility criteria and the amount you may need to factor into your transaction costs.
So where does your stamp duty go? Stamp duty is invested in the economy by the state government that collects it. This revenue is added into the state government budget, which typically covers sectors such as health, transport and roads, police, justice and emergency services.