Everything home buyers need to know about stamp duty

Stamp duty goes back to Australia’s colonial days, when a physical stamp was impressed on land sale documents to make them legally binding. The fee charged for this official stamping was an important source of revenue for early colonial governments.

Today, stamp duty is still administered by the states and territories rather than the federal government. As a result, the amount you’ll have to pay will vary from state to state.

In recent years, some economists and even some state governments have called for the abolition of stamp duty on property as a way of making housing more affordable. New South Wales briefly gave home buyers the option of choosing to pay a one-off stamp duty charge or an ongoing land tax, though this change was later rolled back. And in 2012, the Australian Capital Territory (ACT) commenced a 20-year tax reform program that would gradually phase out stamp duty in the territory.

The amount you’ll pay in stamp duty will depend not just on the state or territory in which you live, but also on the price you’ll pay for your new home. Stamp duty is charged on a sliding scale as a percentage of the sale price – the more expensive your home, the more you have to hand over in taxes.

Most states categorise properties into price brackets and charge a lump sum then a percentage of the value over the minimum value in the bracket. Keep in mind that you may not always need to pay stamp duty on every real estate transaction. Stamp duty concessions and exemptions may be available in some states and territories for selected buyers and property types, such as for first home buyers.

You can use an online stamp duty calculator to determine how much you will have to pay in stamp duty. The important thing is to be prepared for this extra cost and account for it in your home-buying budget.