Stamp duty is a certain kind of tax levied upon certain transactions and documents, typically characterised by the use of a stamp on the document to show that it has been paid. Stamp duty applies in real estate because it is one of the mandatory payments when a person buys a house or property.
As a plain citizen with no experience in real estate or government work, you learn many things for the first time during the house buying process. It becomes confusing navigating this, of course, because you encounter so much that all the professionals in the business expect you to know and understand and make decisions based on. You can learn more by asking questions and doing your study, so you can make informed decisions.
Below is a list of the most frequently asked questions and their answers. In addition to that, we have employed the expertise of a professional real estate worker, Lachlan Walker, who works at Brisbane's Place Estate Agents, to help with them, so you can get straight facts from an experienced maestro.
What exactly is stamp duty?
Stamp duty is a specific type of tax imposed on various legal documents that typically record certain kinds of transactions. The types of transactions stamp duty is levied on include purchasing properties, mortgages, vehicular registrations, customs, etc.
We go to Lachlan Walker, who tells us that stamp duty can also be levied upon specific forms of insurance and favours. He explains that the stamp duty is imposed on this sale, specifically on the one of greater magnitude between the supposed valuation of the property and the amount the property was purchased for. This includes GST charges. This essentially means that bigger and more valuable properties carry heavier stamp duties than those with lesser values. These levies are usually 3-4% of a property's value or purchase price.
Walker advises that the stamp duty should be closely followed for people who intend to purchase properties across different states. This is because it is not uncommon for the fee to mask itself in subtlety, only coming up during the crucial payment period, thoroughly shocking the purchaser. He admonishes that the stamp duty is a stipulation everyone must adhere to, and it is best when it is actively factored into the total budget for the transaction.
Who usually pays for stamp duty?
It is a common misconception that the seller must be the one to pay for the stamp duty. However, the onus is on the buyer to ensure that the stamp duty is sorted out.
How much for stamp duty does one factor in?
We originally gave rough estimates, but the truth is that the stamp duty for every place varies according to government jurisdictions divided by state and territories, as opposed to the federal government's jurisdiction.
Walker notes that because of these conflicting rates, it can become a tad difficult to factor in a given rate. There is an upside to this, though. A few states compromise on what is mandated for certain groups of people, like first-time buyers. People that are purchasing land only too are given compromises in some states.
What time do I have to pay the stamp duty?
Again, the period for stamp duty payments differs. There are designation codes that help to understand them more:
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ACT: This is the designation for a stamp duty payment that must be paid within 28, starting from the date of settlement.
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NSW: This is the designation for a stamp duty payment to be made within the first three months of settling in the purchased home. This implies that the new house owner must pay the stamp duty three months after the contract has been fulfilled.
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NT: This is the designation for a stamp duty payment that must be made within 60 days. The countdown of the 60 days begins on the day on which the sales started or at the time when the new owners are settled in.
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QLD: This stamp duty payment must also be paid within 30 days.
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SA: This is the designation for a stamp duty payment to be made precisely when the new owners are settled in.
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TAS: This stamp duty payment must also be paid within three months.
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VIC: These are payments to be made within the first thirty days of the formal transfer of assets. This is typically on the day of settlement.
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WA- this is a stamp duty payment to be paid within the first two months.
These stipulated periods are there for a reason. Failure to meet up with the payments after the specified period would lead to the new house owners being sanctioned through additional fees and interest rates.
Are there cases when the stamp duty mandate is relaxed?
Yes, like in the case above of first-time buyers, there are times when the stamp duty mandate is not imposed. Other times when the stamp duty process is ignored is through inheritance or property transfer amongst members of the same family.
How exactly do I make my stamp duty payments?
Stamp duty can be laid through the various payment methods available for everyday use. You can pay through checks, online transfers, or credit or debit cards.
What does the government use the stamp duty money for?
Like all taxes being collected by the government, the funds are funnelled into the general economy to better the country's capabilities. They are used to prepare government budgets that focus on amenities like public transport, tourism, payment of civil servants, health, etc.