In comparison to the tumultuous Sydney and Melbourne markets, the Canberra housing market has been a steady performer for capital gains, rental yields and market activity. According to CoreLogic, over the past five years dwelling values in Canberra have increased at an annual pace of 4% per annum.
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, 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: 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. These duty rates are applied on a sliding scale to the value of your property.
The ACT Goverment 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 before the transaction settles, then you would also pay stamp duty on the combined land and building value, the ACT Government says.
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 website.
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.
Who has to pay stamp duty in the ACT?
According to All Homes, 4,731 homes and 5,701 units changed hands in the ACT in 2018. 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 land is transferred to you without you actually purchasing anything. For example, if land is given to you as a gift.
When is stamp duty paid in the ACT?
In 2017, the ACT Government introduced the Barrier Free model which aims to make buying property simpler and more efficient. Under this model, you become liable to pay stamp duty when the title of your property is registered at the ACT Government’s service hub, Access Canberra. You are given 14 days after settlement to lodge your transfer instrument for title registration with Access Canberra.
If you’re eligible for the ACT First Home Owner Grant or the Home Buyer Concession Scheme (we’ll look at this later on), you may be eligible to defer your payment of stamp duty. To be eligible, the duty deferred must be more than $1,000.
If you fail to pay stamp duty on time, the ACT Revenue Office says you may be charged interest on the amount owing and a penalty tax. Penalty tax can range from 25% to 90% of the amount owing depending on the circumstances.
Remember, your solicitor or conveyancer 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 purchasing a new home or a block of vacant residential land, you may be eligible for a stamp duty concession, the ACT Government says.
New homes must have a value of $607,000 or less. If you’re eligible and your home is worth between $470,000 and $607,000, you’ll be able to receive a concessional stamp duty rate. If your home is valued $470,000 or less, no stamp duty will be payable, according to the ACT Government.
Vacant land must be valued $329,500 or less. If your land is valued between $281,200 and $329,500, you may be able to receive the concessional stamp duty rate. If the land is $281,200 or less, no stamp duty will be payable.
From 1 July 2019, the ACT Revenue Office advises that home buyers may not have to pay stamp duty if they (and their domestic partners) have a total gross income below $160,000 the financial year before the property transaction date.
Pensioners who are downsizing may be eligible to a concessional stamp duty rate. The ACT Revenue Office says that the transaction date must be before 30 June 2019.
For new and established homes, your property must be valued $895,000 or less. If you’re home is worth between $680,500 and $895,000, you may be able to receive the concessional stamp duty rate, the ACT Revenue Office explains. If your home is $680,500 or less, no stamp duty will be payable.
For vacant land, it must be valued $434,500 or less to be eligible. If the land is between $361,700 and $434,500, you may be entitled to receive the concessional rate. If the land is $361,700 or less, no stamp will need to be paid, ACT Revenue Office says.
What are the exemptions to paying stamp duty in the ACT?
In some circumstances, you will 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
- 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 contribution
- Intergenerational rural transfers – where farming land is transferred to a younger generation
Other fees and finance considerations when buying property in the ACT
Other related fees
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 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. The ACT Government sets the fees each financial year. From 1 July 2018, the mortgage registration fee is $145 and the transfer registration fee is $386.
And don’t forget about solicitor/conveyancing fees, building and pest inspection fees, plus the other upfront costs you might incur when buying a home.
First Home Owner Grant
If you’re a first home buyer who is buying or building a brand new home, substantially renovated home or off-the-plan home, you may be eligible to receive $7,000 under the ACT First Home Owner Grant. The ACT Revenue Office advises that the Grant is not available for transactions entered into after 30 June 2019.
You may be able to claim both the First Home Owner Grant and a concession under the Home Buyers Concession Scheme, but keep in mind that they have separate eligibility requirements. Be sure to check with the relevant government department in the ACT regarding what you may be eligible for.
Stamp duty by Australian states and territories
Find out how much stamp duty you pay in different states and territories:
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