Just as you're about to hand over your hard-earned dollars on your dream home, there's another payment named Stamp Duty that you'll need to deal with. Most of us are expected to pay this tax, so let's uncover what it is and how it works.
The first important step in dealing with stamp duty is awareness. The origins are thought to have begun in the Netherlands in the 1600s where a physical stamp was placed on documents to make them legally binding once the tax had been paid. In Australia, stamp duty was introduced by state governments primarily for property transfers. All revenue raised from Stamp Duty payments goes directly to the Western Australian Government to be spent on: health, roads and transport, emergency services and education. The more money you fork out on your new pad, the more you'll contribute to the Government coffers. On the plus side, you have your fabulous new home.
The tax rate varies from state to state with WA rates varying depending on the price of the property you are buying. To avoid any confusion, you can access the Government's website to learn all about the different price bands, and we also a stamp duty calculator to help you.
Using the calculator, the cost of stamp duty on a $500,000 home would be $17,765 (for non first-home buyers). On a million dollar property that increases to $42,615. It's important to note that double the house price does not equal double the stamp duty.
Depending on eligibility requirements, some first-home buyers may be exempt from paying Stamp Duty. If you purchase an established property for less than $430,000, there is a rebate, which means you might get out of it scot-free! If you're a first time buyer purchasing vacant land, then the threshold is $300,000. Ensure you meet requirements before you get too excited, and check whether you may also be eligible for the First Home Owner Grant.
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