If you are on the hunt for a property and are thinking about the costs involved, you have probably heard of or read about stamp duty. Stamp duty in Queensland is called transfer duty, and is a topic that garners a lot of media attention and its reform or abolition is often used during election campaigns to help win votes. But what exactly is stamp duty?
To put it simply, transfer duty is a form of tax that is payable upon the purchase of a property. Stamp duty originated in a time when buying and selling property was a lot less common – and far more time consuming – than it is today. An actual stamp was used to formalise the transaction documents, which is where the term ‘stamp duty’ originally came from. While purchase documents can still be sent away for ‘stamping’ the process is far more modern and can be organised by your conveyancer or property lawyer and performed electronically by your state’s revenue office.
Transfer duty is a separate cost to the purchase price, and it is important to understand that it is an added cost that will need to be considered when working out how much you can afford to borrow.
Calculating transfer duty is not a one-size-fits-all process. There are a few things to factor in to get the exact amount of stamp duty you will have to pay. Here’s what you need to consider:
The state or territory you are purchasing property in
Each state and territory sets their own rate of stamp duty, as well as deciding who will be exempt or eligible for a discount. To calculate transfer duty for Queensland, you can visit the Queensland Government website and use the Transfer Duty Estimator tool.
The cost of the property you are buying
The purchase price of your property will determine your transfer duty calculation. Again, each state and territory sets their own price brackets and in Queensland, there are five of these.
- Properties less than $5,000 incur $0 transfer duty;
- Properties more than $5,000 but not more than $75,000 incur trasnfer duty of $1.50 for each $100, or part of $100, over $5,000;
- Properties costing $75,000 to $540,000 attract transfer duty of $1,050 plus $3.50 for each $100 or part of $100, over $75,000;
- Properties costing between $540,000 and $1,000,000 will incur transfer duty of $17,325 plus $4.50 for each $100 or part of $100, over $540,000; and
- Properties with a purchase price of more than $1,000,000 will also have transfer duty of $38,025 payable plus $5.75 for each $100 or part of $100, over $1,000,000.
Any exemptions or discount you may be eligible for
The aforementioned figures only apply if you are not eligible for any type of discount or exemption. Depending on which state you are buying in, you may see a reduction in your transfer duty, or have it waived completely if you are a first home buyer or a pensioner. Check with your conveyancer or property lawyer to see if you are eligible for any discounts.
When is transfer duty payable?
In Queensland, you must pay the transfer duty fee within 30 days of settlement. Most purchasers will pay stamp duty at settlement so that all their costs are taken care of at the same time.
If you are thinking about purchasing a property, speak to a conveyancer at Cairns Conveyancing Solicitors today.