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Stamp Duty Explained

There are many unexpected costs you will need to budget when purchasing a new property or buying a piece of land, Stamp Duty is one of them. Join Marissa and our very own Mathew Denton so you can have a clear idea of when it is payable, how it is calculated and what tax considerations might come into play.
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Stamp Duty Explained

There are many unexpected costs you will need to budget when purchasing a new property or buying a piece of land, Stamp Duty is one of them. Join Marissa and our very own Mathew Denton so you can have a clear idea of when it is payable, how it is calculated and what tax considerations might come into play.
Share this article with friends and family:
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Keep reading

What is stamp duty?

For starters it is important that you have an understanding of what Stamp duty is.

Stamp Duty is a fee that is payable to the government when you purchase an existing property or a block of land. Basically, it is a form of tax whose value is calculated from the value of your new property.

How is it calculated?

As mentioned, the value of this fee depends on the purchase price of your property, and might change across States. As a rough guide, stamp duty costs in South Australia are usually around 5% of the property’s value.

Some of the factors that can affect the value of this fee can include:

  • Whether it is an existing property or newly constructed
  • If you are a first home buyer
  • Whether we are talking about an ‘owner-occupied’ or investment property

If you would like to accurately understand your stamp duty costs, our Brokers at Rise High can help! Or alternatively, you can have a go at calculating it yourself with our easy-to-use stamp duty calculator, which can provide great insight on the cost of this fee depending on your property’s type and location.

Can Stamp Duty be added to your mortgage?

Unfortunately, no… Unless you currently have another property with existing equity!

Stamp duty is a fee that comes out of your deposit amount and is payable if you do not already have an existing property. In the case that you do, it is possible to use your existing property’s equity to pay stamp duty costs of another one.

When is it payable?

Stamp Duty will be payable to your State revenue office on the day of settlement. Delaying or postponing this payment is unfortunately not an option.

Working with the correct team of experts can allow you to organise and plan this payment. Your conveyancer will often organise this transaction on your behalf, making the process smooth and simple.

Are there any tax benefits or can it be tax-deductible?

Sadly, the cost of this fee is not tax-deductible.

Nonetheless, a fun fact you might want to know is that if you are looking at an investment property, the fee that you paid upfront will potentially reduce the capital gains tax that you would have to pay when selling the property. In this scenario, Stamp Duty would effectively be considered as part of the capital base of the property’s purchase price, which is then used to calculate your payable capital gains tax.

In the case of owner-occupied homes, capital gains tax is not applicable so there would be no tax benefits associated with it.

It is extremely important that you consider if the property you are purchasing will ever become an investment property. If it might, keeping documentation on your stamp duty costs might be a smart idea. It will pay long term by enabling you to get deductions when the time to sell comes around!

Our team of experts is always here to guide you through the purchase of your new property, guiding you through Stamp Duty, Lenders Mortgage Insurance (LMI) and other unexpected costs you should be aware of. If you would like to schedule a free consultation with one of our award-winning brokers, to find the right home loan, property investment loan or construction loan, reach out today! We would love to empower you on this journey.

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