If it is your first time buying a property you will soon realise that it is not only the house fee that you have to pay for, rather there are a quite a few fees that need to be taken of. The most significant of these being stamp duty fees. Although stamp duty fees differ from state to state there are basic things that you need to know so that you are not blown out of the water before you even get started.
What is stamp duty?
Stamp duty is a tax that a buyer pays when purchasing a house. The property value of a house is usually what determines how much you will be paying in stamp duty. This is further differentiated by which state you purchase your house in. As a general rule of thumb, the more expensive the property is the more you can expect to pay in stamp duty.
To factor this into your budget you can make use of stamp duty calculators that can give you an estimate on how much you can expect to pay. Knowing how much you are expected to pay will help you find a home loan that is suitable to pay off the stamp duty fees. The last thing you want is to miscalculate your funds and meet a shortfall later on.
Consider stamp duty concessions
Many people forget about the infamous stamp duty when it comes to the property buying process. This tax, which varies from state to state, is unfortunately an inescapable step in the process of buying property in Australia.
There are stamp duty concessions for first time home buyers that can ease the financial strain of buying property. States such as Queensland have been offering first home buyers these concessions to the value of $20,000 which made it the top state to see number of first time home buyers rise as they took out home loans to take advantage of this opportunity.
Other states such as Victoria is also offering first time home buyers a stamp duty concession if the established home is worth up to $600,00 and upwards, and they live at the property for at least 12 months.
What is the process?
Stamp duty in Australia is paid no more than 30 days after the settlement of your property purchase by the purchaser. It costs thousands of dollars to pay off stamp days, so you want to be prepared financially. The sooner you pay it off the better, as it will help you to focus on other expenses that come with owning a property.
Check the terms that come with stamp duty concessions
It is best to check out the terms that come with stamp duty concession in each state. When reading the fine print, you will find that this is not applicable to investors. There are also age restrictions, meaning that you need to be 18 years old and over to make a claim. In some states, pensioners are not applicable to accessing stamp duty concessions. You will also soon find out that some states have lower or high cut off fees that can claim on concessions.
For example, you might make a claim on property that is less than $550,000 in Queensland, but this differs in South Australia where you receive a concession on property up to the value of $21,330. It also has a cut-off date meaning that if you come after the 30th of June the concession no longer applies.
How to lower the costs of stamp duty?
- Find a cheaper property that does not push up the stamp duty price. Stamp duty is calculated based on the value of your house so the more expensive it is the more you will pay.
- You could consider changing states. If the option is available to you, you could consider moving to another state to take advantage of its stamp duty concessions that are lower.
- Lower the cost of building. If you are planning to build your own property then you can consider looking into purchasing cheaper fixtures.
There are more options that you could look into when it comes to reducing the stamp duty that comes with purchasing a house, but it will be best to leave your options open to find ways in which you can save thousands of dollars.