The impact of stamp duty
Whatever stage you’re at on the property ladder, a home owner looking to move, a first-home buyer or an investor, stamp duty (or transfer duty as it’s now known as in New South Wales), is a significant cost in the buying process; according to e61 Institute-PropTrack research, this tax is now costing property buyers up to six times more than a generation ago in some parts of Australia.
Transfer duty is the tax as levied by the Australian state and territory governments on the transfer of property. The amount payable varies depending on the value of the property being purchased, with properties in higher price brackets attracting a higher rate of tax.
Transfer duty calculations in NSW from July 2023
| Property value | Transfer duty rate |
| $0 to $16,000 | $1.25 for every $100 (minimum $20) minimum duty $10, prior to 1 February 2024 |
| $16,000 to $35,000 | $200 plus $1.50 for every $100 over $16,000 |
| $35,000 to $93,000 | $485 plus $1.75 for every $100 over $35,000 |
| $93,000 to $351,000 | $1,500 plus $3.50 for every $100 over $93,000 |
| $351,000 to $1,168,000 | $10,530 plus $4.50 for every $100 over $351,000 |
| Over $1,168,000 | $47,295 plus $5.50 for every $100 over $1,168,000 |
Use the Revenue NSW Transfer of land or business calculator to find out how much transfer duty you need to pay on a property here.
When is transfer duty paid?
You must pay transfer duty within three months of signing a contract for sale or transfer, except in the case of off-the-plan purchases.
If you buy off-the-plan and you intend to live in the property, you may be able to defer your transfer duty liability for up to 12 months.
Visit the NSW Government website for more details about transfer duty here.
Help for first home buyers
First home buyers receive a transfer duty exemption or pay a reduced rate when buying an existing home, new home or vacant land to build a home on worth up to $1 million in NSW.
Introduced on 1 July 2023, this scheme, combined with the higher interest rates on savings may have contributed to more first home buyers getting on the property ladder; the time to save for a 20% deposit is now quicker than last year according to Domain’s latest 2024 First-Home Buyer Report in collaboration with Unloan.
Under the First Home Buyers Assistance Scheme (FHBAS), eligible first home buyers purchasing an existing property for $800,000 or less won’t pay any transfer duty at all. Those who buy a property worth between $800,000 and $1 million will pay a reduced rate. The amount payable depends on the value of the property.
To be eligible for FHBAS, you must move into the property within 12 months of the settlement date on an existing home or 12 months from the completion date of a newly-built home. You then need to live in your home for at least 12 months.
More details about the scheme are here.
Impact on investors
As transfer duty can add tens of thousands of dollars to the cost of purchasing a property, it does make it harder for some investors to achieve a positive return on their investment, especially in areas where property prices are already high.
Plus, the upfront cost of stamp duty may impact cash flow in terms of having to borrow more money to cover the cost. This will increase their monthly mortgage repayments and reduce their overall cash flow.
However, savvy investors factor these costs in their financial analyses, balancing them against expected rental income and capital gains. Once they know their budget, they can then make strategic choices regarding location and property type, looking positive and negative gearing, and can optimise their property investment.
Speak to your accountant or financial specialist so you know exactly what to consider for your financial situation and your property investment strategy.
Whether it is from an investment or homeowner’s point of view, we’re always keen to share our knowledge, and are constantly looking at innovative ways to help you get the best from your asset.
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