The nuts and bolts of stamp duty. 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 our stamp duty payments goes directly to the Western Australian Government to be spent on areas such as health, roads and transport, emergency services and education.
The tax rate varies from state to state with WA rates varying depending on the price, which can be confusing if you’re not a mathematical genius. Fortunately, you can access the Government's website to learn all about it and there's 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 and for a $1,000,000 home it would be $42,615.50 so you'll see that, even for the non-mathematical, double the house price does not equal double the stamp duty. 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.
Depending on eligibility requirements, some first homebuyers might have reason to celebrate. If you purchase an established property below $430,000, there is a stamp duty rebate meaning under the current circumstances, you might get out of it scot-free! Yes! However, go beyond this and you cough up like the rest of us.
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