The cost of stamp duty in the ACT?

Thinking about buying a property in the Australian Capital Territory (ACT)? Don’t forget to factor in the cost of stamp duty, or ‘conveyance duty’ as it’s officially referred to by the ACT Government. We’ve broken down how stamp duty is calculated for property buyers in the ACT and how you could save if any concessions or exemptions apply.

Recent years have seen Canberra property values steadily escalate, and the city is now the second-most expensive state or territory capital across Australia after Sydney, based on the latest CoreLogic data.

If you are considering entering the ACT property market, don’t forget to factor the cost of stamp duty into your budget. Stamp duty can end up being one of the biggest upfront costs you pay when buying a property, and could potentially add up to tens of thousands of dollars.

What is stamp duty?

Stamp duty, or conveyance duty as it’s also known in the ACT, is a government tax that’s imposed when you acquire a home, land or commercial property, or in other words, when property is transferred from one person to another.

Stamp duty is charged by state and territory governments, so the rules on how it’s calculated will vary from place to place. However, a general rule is that the more expensive your property is, the more stamp duty you’ll need to pay.

Stamp duty is primarily determined by three major factors: the state or territory you’re buying the property in, the value of the property, and whether you’re eligible for any concessions or exemptions. Let’s take a look at how stamp duty is worked out in the ACT.

How is stamp duty calculated in the ACT?

In the ACT, stamp duty is calculated by applying the appropriate duty rate to your property’s purchase price or market value. The ACT Revenue Office says it sets two duty rates: non-commercial and commercial. Non-commercial transfer duty applies where your property is for residential or rural purposes, whereas commercial transfer duty applies to property used for commercial purposes such as industrial, business or retail property.

The ACT Government has committed to lowering rates of duty, and from 1 July 2021, owner-occupiers pay less duty than non-commercial property investors – though in both cases, duty is calculated on a sliding scale.

Also from 1 July 2021, stamp duty no longer applies to commercial properties with a dutiable value of $1.6 million or less. For commercial properties valued above $1.6 million, a flat rate of 5% duty applies.

The ACT Government explains that if you buy a property that already has a building on it, you pay stamp duty on the combined value of the house and the land. Similarly, if you buy vacant land but the seller is building a dwelling on the land as part of the purchase contract – which may be the case with an off-the-plan property or house and land package, for example – you would pay stamp duty on the combined land and building value.

However, if you buy vacant land under one contract, and arrange to build under a separate contract, you would only pay stamp duty on the land contract, according to the ACT Revenue Office.

You can get an idea of how much stamp duty you’re likely to pay in the ACT with our Stamp Duty Calculator. Select ACT from the dropdown menu to get started.

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Who has to pay stamp duty in the ACT?

Whether you’re buying or acquiring property for residential, commercial, farming or investment purposes, if you’re acquiring property in the ACT you’ll need to pay stamp duty unless any exemptions apply, according to the ACT Government.

Stamp duty is also typically payable if ownership or interest in a property or land is transferred to you without you actually purchasing anything. For example, this could occur if land is given to you as a gift.

The Revenue Office says you must self-assess the duty that you need to pay, and that it may charge interest or penalty tax if you underestimate how much duty you owe. This means it is typically a good idea to ask your solicitor for advice on how much stamp duty you are likely to owe on your property purchase.

When is stamp duty paid in the ACT?

Property buyers in the ACT become liable to pay stamp duty when the title of their property is registered at the ACT Government’s service hub – Access Canberra. As a buyer or recipient of the property, you are given 14 days after settlement to lodge your transfer instrument for title registration with Access Canberra.

Remember, your conveyancing solicitor may assist you with completing and lodging stamp duty documents, and they should be able to advise you on key deadlines specific to your transaction.

What stamp duty concessions apply in the ACT?

If you’re buying a home, land or both in the ACT, you may be eligible for a stamp duty concession through one of a range of schemes. This could reduce the amount of stamp duty you have to pay – potentially to zero in some cases. These schemes include:

Home Buyer Concession Scheme

The Home Buyer Concession Scheme is designed to help more people buy a home in the ACT through savings on stamp duty. The Scheme replaced the First Home Owner Grant in the ACT, which ended on 30 June 2019.

All properties anywhere and at any price in the ACT are eligible for the Concession Scheme, including vacant residential land and both new and established homes.

To be eligible to pay zero stamp duty under this scheme, the Government says you must meet all of the following criteria:

• The total gross income of all buyers, including their partners, must fall within set thresholds. These range from a maximum of $160,000 annually if you have no children, to $176,650 annually if you have five or more children.
• All buyers and their partners must not have owned any other property in the last two years.
• At least one buyer must live in the home continuously for a minimum of one year, starting within 12 months of settlement date or the date that a certificate of occupancy has been issued.

For 2021/22, the home buyer concession is capped at a maximum of $35,910.

Pensioner Duty Deferral Scheme

The Pensioner Duty Deferral Scheme allows pensioners in the ACT who are buying a home to defer the payment of stamp duty.

The payment can be deferred until the property is transferred to someone else, however interest is charged at market rates on the duty deferred.

To be eligible, the ACT Government says you must meet all of the following criteria:

• At least one buyer must be an eligible pensioner as of the transaction date, meaning they must either:
  • receive an Age Pension from Centrelink or the Department of Veterans’ Affairs (DVA), or
  • receive a disability support pension from Centrelink and are at least 50 years old, or
  • have held a DVA Gold card for at least one year.
• At least one buyer (either the eligible pensioner or their partner) must meet the residency requirement – generally this involves moving into the home within 12 months of settlement and living there for at least a year.

Disability Duty Concession Scheme

Adults with a long-term and permanent disability who qualify for the NDIS may be eligible for the ACT’s Disability Duty Concession Scheme (DDCS). If you’re eligible, the DDCS exempts you from having to pay conveyance duty if you purchase a home to live in. The total value of the home (house and land) must be $750,000 or less.

What are the exemptions to paying stamp duty in the ACT?

In some circumstances, you may be exempt from paying any stamp duty in the ACT. According to its Revenue Office, some of the instances where you could be exempt from paying stamp duty include:

• Deceased estates – where property is being transferred to the beneficiary of a deceased estate.
• Matrimonial transfers – where property is transferred pursuant to a court order, which may occur following the end of a domestic relationship.
• Spouse principal place of residence transfers – where the transfer results in the property being held by both partners as joint tenants, tenants in common in equal shares or tenants in common in proportion to their contributions towards buying and improving the property.
• Intergenerational rural transfers – where farming land is transferred to a younger generation.

Other fees and finance considerations when buying property in the ACT

On top of stamp duty, you’ll also need to pay a mortgage registration fee (if you’re buying your property with a home loan) and a land transfer registration fee. The mortgage registration fee is a charge for registering a home loan and for registering the property as security on that loan. The transfer registration fee covers the cost of transferring the title of the property into your name. The ACT Government sets these fees each financial year. From 1 July 2021, the mortgage registration fee is $155 and the transfer registration fee is $416.

And don’t forget about solicitor’s fees, building and pest inspection fees, or the other upfront costs you might incur when buying a home.

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This article was updated by Nicola Field.

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