Stamp duty
A state tax on property purchases, usually the largest single upfront cost after the deposit.
Stamp duty is charged by each state and territory when property changes hands. It is calculated on the purchase price using a sliding scale, so the rate rises with the value of the property.
Rates, thresholds and concessions differ substantially between states. First home buyers, off-the-plan purchases and some pensioners often qualify for exemptions or reductions that can be worth tens of thousands.
It must generally be paid at or shortly after settlement and cannot usually be added to the loan. That makes it a cash requirement on top of the deposit, which catches many first buyers out.
The hidden cost of buying
On a $750,000 purchase, stamp duty can run to $30,000 or more depending on the state — money required in cash at settlement, separate from your deposit.
The bit people get wrong
Stamp duty is not deductible on your own home, and on an investment property it is not deductible either. It is added to your cost base instead, reducing your capital gain when you eventually sell.
Common questions
Do first home buyers pay stamp duty?
Often not, or at a reduced rate, up to a value threshold that varies by state. Some states now offer an annual property tax as an alternative to a lump sum.
Can I add stamp duty to my mortgage?
Generally no, because it is payable at settlement and lenders assess the loan against the property value. You can sometimes borrow more against other security to fund it.
Do foreign buyers pay extra?
Yes. Every state applies a foreign purchaser surcharge on top of ordinary duty, often an additional seven to eight per cent of the price.
Run your own numbers