Buying a house can be an exciting time in your life but there are some aspects of purchasing a home you need to understand before committing to purchasing.
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Stamp duty (also called transfer duty or duty) is a tax levied by state governments on property purchases and is usually paid within 30 days of settlement.
The amount you will pay in stamp duty varies between states and territories so you need to check your state guidelines before buying to calculate how much you will have to pay.
"Stamp duty can be quite a large amount," said Adrian Kelly, president, REIA.
"It is the largest component of the transaction costs of acquiring a property. For that reason the potential buyer needs to factor in the amount to ensure their finances including borrowings cover this.
"The amount varies not only on a state by state basis but also whether the buyer is purchasing their first home with states having concessional rates for first home buyers.
"Buyers should check on line with their state Revenue Office which will have a stamp duty calculator."
Most state governments waive stamp duty for first-home buyers purchasing homes valued below a certain threshold - and the exact amount a buyer pays varies according to:
- Whether they are an owner-occupier or investor
- Whether they are a first-home buyer
- Whether the buyer is purchasing an established home, a new home or vacant land
- The property's sale price.
In welcome news for property buyers, stamp duty reform is back on the agenda.
"Taxes are one of the factors determining investment in housing and thus housing supply and housing affordability," said Mr Kelly.
"Abolition of stamp duties would have many positive impacts for the economy. The removal of what economists call inefficient taxes would boost economic growth at this crucial time.
"Economic analysis shows that economic activity in Australia can be lifted by shifting the composition of taxes from high economic cost state taxes to lower cost Australia-wide taxes, without changing the overall level of tax revenues.
"A potential buyer needs to factor in the amount to ensure their finances including borrowings cover this.
- Adrian Kelly, REIA.
"Cooperation between the Australian Government and the states is needed to undertake reform of inefficient state taxes, such as stamp duty, which is what Supporting the Road to Recovery, the Draft Report of the independent NSW Review of Federal Financial Relations has advocated."
