How Your Offset Account is Your Financial Best Friend
READ MORE
Stamp Duty has long been considered a necessary evil when it comes to property purchasing. Whilst it generates significant revenue for state governments, it does impact some potential buyers’ ability to transact on property as they wish.
It can also be confusing as to whom is required to pay it, who is exempt and how it is calculated, so we will break it down.
In essence, stamp duty is the tax that is paid when a property is changed hands to cover the government charges related to that transaction. It is a charge not specific to property, being also payable on hire purchases, car registration and other instances where the government incurs a cost to transact.
When purchasing a property, the relevant duty payable is required to be paid to the state revenue office within thirty days to three months of settlement. It is, however always collected at settlement via your settlement agent.
Each state has their own metric to calculate stamp duty, with some states being more expensive than others and Canberra buyers being exempt from it altogether. The other factor dependent on how much you will pay is the value of the property, with the higher the price, the bigger the duty.
First home buyers are the group most likely to be exempt from paying stamp duty. Each state varies in terms of the threshold for payment, but in the case of Western Australia, no stamp duty is payable for homes worth less than $430,000. Above this amount, purchasers are charged $19.19 for every $100 or part thereof up to $530,000. From there, the full rate is payable.
Another instance where stamp duty is not deemed payable is when there is a relationship split where one party buys out the other and a court order is in place.
Concerns have been raised in recent years regarding stamp duty and whether it is outdated and if its negative impacts outweigh the benefits from the income it generates.
Stamp duty charges have not moved with the times, whereas some have argued that it should have. As it is a fee to compensate the administrative process of land title transfer, old systems were significantly more time consuming and cumbersome, with documents literally being “stamped”. Today the process is administratively more efficient with the advent of technology and electronic settlements.
As property prices have soared in recent years, relative stamp duty charges have remained in line with such increases. Some argue that this has been a somewhat “unfair” source of revenue raising from the government, profiting from market buoyancy. In addition, with stamp duty not being revised when property prices have risen, real estate industry insiders see this as a hinderance to sale volumes as potential buyers are deterred by the charge that can run into the tens of thousands.
Stamp Duty does not seem to be going anywhere anytime soon, so having the right information from a team of professionals is important when making a property purchase whether it be your first or one of many.
For more information on what your stamp duty charge may be, check out our page or calculators here.
Get a great deal on your home loan with the Perth Mortgage Broker who is in your financial corner.
"*" indicates required fields
"*" indicates required fields