Do first home buyers pay stamp duty in Australia?

• Stamp duty is a state tax on property purchases in Australia.

• First home buyers are eligible for discounts and concessions, varying by state.

  • Victoria

  • New South Wales

  • Queensland

  • Western Australia

  • South Australia

  • Tasmania

  • Australian Capital Territory

• There is complex eligibility criteria, so its important to do your research and seek professional advice.

What is stamp duty?

Taking things back to first principles, what is stamp duty? For starters, its not called stamp duty, everywhere (see the table below), but we’re calling it that here to keep things simple.

Stamp duty is a type of tax that is levied by state governments in Australia and is payable by the purchaser of a property. The funds generated by stamp duty play an important role in paying for schools and hospitals, as they represent at least one-fifth of tax revenue for all states and territories, except the ACT.

The amount of stamp duty payable a homebuyer pays depends on whether the home is established, new or vacant land, the state or territory, the purchase price, and any discounts or concessions that apply.

As an illustration, for a non-first homebuyer (owner occupier) purchasing an established home for $500,000, the following stamp duty is payable:

One thing to note is that, your solicitor or conveyancer will be able to ensure all requirements for stamp duty are completed as part of the settlement process. This can include any required assessment of the contract of sale and payment is completed. They should also let you know if you are eligible for exemptions or discounts.

Stamp Duty for First Home Buyers

In recognition of increasingly difficult task of buying your first home, the states and territories have introduced discounts and concessions to stamp duty.

For example, Victoria has implemented two discounts with one referred to as the first home buyer duty exemption, while the other is a concession. The exemption applies for homes purchased with a dutiable value up to $600,000, and the concession applies for dutiable values between $600,001 and $750,000.

Unfortunately, every state has developed its own set of rules and discount rates, so there is no one size fits all explanation. However, the benefits to first homebuyers can be significant, so we’ve provided a summary and link each state’s stamp duty calculator below.

1. Stamp Duty in Victoria (VIC)

In Victoria, the rate of stamp duty is organised into brackets depending on the purchase price (or dutiable value specifically). The brackets range from 1.4% for $0-$25,000 and $110,000 plus 6.5% of the value that exceeds $2,000,000.

For first home buyers, Victoria has implemented two discounts with one referred to as the first home buyer duty exemption (no duty is payable), while the other is a concession (a discount on the duty payable). The exemption applies for homes purchased with a dutiable value up to $600,000, and the concession applies for dutiable values between $600,001 and $750,000.

2. Stamp Duty in New South Wales (NSW)

In New South Wales, the rates of stamp duty are bracketed, ranging from 1.25% for 0-$16,000 up to $175,830 plus 7% of the value that exceeds $3,505,000.

NSW also has three assistance packages available for first home buyers.

The First Home Buyers Assistance scheme provides a full exemption from transfer duty for new or existing homes valued up to $800,000. Homes valued over $800,000 and less than $1,000,000 may qualify for a concessional rate.

The First Home Owner Grant (New Home) provides $10,000 towards the purchase price of a new home (i.e. no-one has lived in it before) valued up to $600,000 for a new home or $750,000 for house and land package. This grant is available in addition to the previous scheme.

Finally, the Shared Equity Home Buyer Helper restricts eligibility to key workers (e.g. nurses, teachers etc.).

3. Stamp Duty in Queensland (QLD)

In Queensland, the rates of stamp duty are bracketed, ranging from 0% for 0-$5,000 up to $38,025 plus 5.75% of the value that exceeds $1,000,000.

A home concession applies for properties that you intend to move into and live in. In case reduce that amount of stamp duty you must pay by up to $7,175.

A more generous first home concession applies for first home owners for properties up to $550,000 in value. It can save you up to $15,925.

4. Stamp Duty in Western Australia (WA)

In Western Australia, the rates of stamp duty are bracketed, ranging from 1.9% for 0-$120,000 up to $28,453 plus 5.15% of the value that exceeds $725,000.

The First Home Owner Rate of Duty, provides a concessional rate of stamp duty for properties valued up to $430,000. There is also a sliding scale of concessions for properties valued between $430,001 and $530,000.

5. Stamp Duty in South Australia (SA)

In South Australia, the rates of stamp duty are bracketed, ranging from 1.0% for 0-$12,000 up to $21,330 plus 5.50% of the value that exceeds $500,000.

The First Home Owner Grant and stamp duty relief are available to eligible first home buyers for the purchase of new homes that have not previously been lived in. The grant provides assistance of up to $15,000, while the stamp duty relief amounts to an exemption for new homes with a value of $650,000 or less. It also provides a partial exemption for new homes with a value between 650,000 and $700,000.

6. Stamp Duty in Tasmania (TAS)

In Tasmania, the rates of stamp duty are bracketed, ranging from $50 for 0-$3,000 up to $27,810 plus 4.50% of the value that exceeds $725,000.

Tasmania offers first home buyers of established homes a duty concession. For those eligible and purchase a home worth no greater than $600,000, a 50% discount on property transfer duty will apply. Tasmania also offers the First Home Owner grant, worth $30,000 for new build homes.

7. Stamp Duty in the Australian Capital Territory (ACT)

In the ACT, the rates of stamp duty for owner occupiers are bracketed, ranging from 0.49% for 0-$260,000 up to 4.54% of the total value for properties worth more than $1,455,000.

The ACT offers the First Home Owner Concession, providing eligible first home buyers with a stamp duty concession of up to $34,504 for both new and established homes. The concession is restricted to household incomes up to a certain level, so it is important to check this out.

Conditions and Eligibility Criteria

While each of these exemptions, concessions and discounts are enticing, each of them come with complex eligibility criteria. These often include:

1. Property Value: The benefits may be linked to the value of the property, with higher thresholds in place for full exemptions or discounts.
2. Occupancy requirements: Some states may require you to live in the property as your principal place of residence for a certain period to qualify for the concessions.
3. Citizenship: Non-Australian citizens or permanent residents might have different eligibility criteria.
4. First Home Buyer Status: To qualify for the concessions, you must meet the definition of a first home buyer, which typically means you have not owned or co-owned a residential property before.
5. Means testing: In some cases, there may be income limits for first home buyers to qualify for certain concessions or grants.
   
   

Steps to Claim Stamp Duty Concessions

1. Check Eligibility: Confirm the eligibility criteria for stamp duty concessions in your state or territory.
2. Research Property Value: Understand the property value thresholds for full exemptions or concessions.
3. Apply: Lodge any necessary applications or documentation required to claim the concession.
4. Coordinate with Your Conveyancer: Work closely with your conveyancer or legal representative to ensure all aspects of the process are covered.
5. Stay Informed: Keep yourself updated on any changes to the stamp duty concessions or eligibility criteria in your state or territory.
   
   

Conclusion

As you can see, stamp duty can add significantly to the cost of purchasing a new home. Luckily, all states and territories have assistance mechanisms in place to reduce the burden on first homebuyers.

This article is a general overview and it is clear that both stamp duty and related exemptions, concessions, discounts and grants are highly complex to understand and comply with. For this reason, it is important to consult an expert such as a lawyer or conveyancer.