Stamp Duty is an old – but commonly used – name for what is officially known now in Victoria as “Land Transfer Duty”.
It’s a fee that you have to pay to the government when you purchase a property or when ownership rights to a property is transferred to you. Your conveyancer, solicitor or bank will normally organise the details and payments for you as part of the overall purchasing process.
Since stamp duty is derived from a percentage of the value of the property, it can be a significant extra cost you’ll definitely want to keep in mind when buying land to build or a house with land, and while organising your budget and loans.
How much is Stamp Duty?
How much you’ll pay depends on what’s called the “dutiable” value of the property. Usually, this dutiable value is the purchase price or the market value of the property on the date you sign the contract of sale.
The cost of stamp duty is calculated on a sliding scale. It currently starts at 1.4% for properties valued at $25,000 and rises to 5.5% for properties valued at $960,000 or more. For example, if you do buy a property with a dutiable value of $960,000 you’ll be up for $52,800 in stamp duty – ouch!
Can I just not pay Stamp Duty, please?
Buyers on a budget love house and land packages for a reason. Stamp duty isn’t counted for the building that doesn’t yet exist, only the land! This is called an off-the-plan concession and can greatly reduce your overall purchasing costs and mortgage.
Also, at present, first home buyers in Victoria are often exempt from paying stamp duty entirely! You’ll need to buy a property with a dutiable value of less than $600,000; so vacant land or a house and land package are smart, good value options to meet this requirement without having to move out to the bush. If the property is valued at more than $600,000 but less than $750,000 only a 50% concession may apply. There is no stamp duty reduction for properties with a dutiable value of over $750,000…which knocks out most existing homes in the Melbourne metro area. Discover all the House and Land packages at Exford Waters today, you’ll easily be able to find your next home that you’ll love and save on stamp duty costs.
There may be a range of other stamp duty concessions available depending on your unique situation. Find out more from the State Revenue Office here (they’re the ones that collect stamp duty) or calculate your potential costs with their handy tool here. But if we were you, we’d avoid paying as much stamp duty as possible and spend that cash on new furniture, home extras or a big (and well-deserved) holiday!