Buying a property is a major decision and one that can require a lot of careful planning and budgeting. When doing up a budget, it’s important to consider how much stamp duty you may need to pay, as it could potentially add up to tens of thousands of dollars.
What is stamp duty?
Stamp duty, or transfer duty as it’s referred to in Queensland, is a government tax that’s most commonly imposed when you acquire 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 Queensland.
How is stamp duty calculated in Queensland?
The Queensland Office of State Revenue (OSR) calculates how much stamp duty you owe by applying a set transfer duty rate to the ‘dutiable value’ of your property. Usually your property’s dutiable value will be its market value or the amount you agreed to pay for the property, whichever one is higher. This means that even if you didn’t purchase the property, for example if it was a gift, you may still need to pay stamp duty based on the property’s market value.
If you’re a foreign buyer acquiring residential land, the Queensland Government says it imposes an additional duty on top of the standard transfer duty rate. At the time of writing, this additional rate is 7%.
Get an idea of how much stamp duty you’re likely to pay in Queensland with our Stamp Duty Calculator. Select QLD from the dropdown menu to get started.
Who has to pay stamp duty in Queensland?
According to the Queensland Government, anyone who buys or acquires property in Queensland may need to pay stamp duty. Regardless of whether your property is for residential, commercial or investment purposes, you’ll need to pay stamp duty unless you’re eligible for an exemption or your property is valued at less than $5,000. The Government advises that even property transfers that don’t attract a stamp duty cost will still need to be assessed and stamped by the OSR .
When is stamp duty paid in Queensland?
The Queensland Government explains that you must lodge your stamp duty documents, including any concessions or exemptions you want to claim, with the relevant agency within 30 days after they have been signed. After you lodge your documents and pay the duty, the papers will be stamped and returned to you. Usually you’ll only be able to complete the transfer of property after this has occurred. In addition, according to the Queensland Government, most banks require stamped transfer documents at settlement.
Before you lodge your documents, the OSR or a registered self-assessor (often a solicitor or conveyancer) will assess your documents and advise how much stamp duty you have to pay.
Your solicitor or conveyancer may also 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 Queensland?
If you’re intending to use the property as your home, you may be able to claim a concession to reduce the amount of stamp duty you have to pay. In some circumstances, concessions will apply so that no stamp duty is payable at all.
The Queensland Government offers three home concessions:
- Home concession
- First home concession
- First home vacant land concession
It’s important to note the Queensland Government’s advice that only individuals can claim concessions. Companies aren’t eligible to claim concessions except when they’re acting as a corporate trustee. Trustees are only eligible in certain limited circumstances.
You may be able to claim the home concession if you’re acquiring a residence that you intend to make your home. According to the OSR, this applies as a lower rate of stamp duty on the first $350,000 of your home’s dutiable value, and could save you up to $7,175 on stamp duty as at the time of writing.
To be eligible for the home concession you must meet the following requirements:
- Move into the home with your personal belongings and live there on a daily basis within one year of settlement; and
- Not dispose of (that is sell, transfer, lease etc.) all or part of the property before you move in. The OSR advises that to retain the full benefit of the concession, you must also not dispose of any part of the property for at least a year.
In addition to claiming the home concession, if the residence will be your first home you may also be able to claim the first home concession. According to the OSR, as at the time of writing, this could save you up to $15,925 and, depending on the value of the property you’re buying, may even reduce your stamp duty to nothing. Importantly, at the time of writing, the first home concession only applies if the home is valued under $550,000 for stamp duty purposes. But if your property is valued above this, you may still be able to claim the home concession.
To be eligible for the first home concession you must meet the following requirements:
- Never have claimed the first home vacant land concession;
- Never held an interest in a residence anywhere in Australia or overseas;
- Be at least 18 years old (this requirement may be waived by the government in some circumstances);
- Move into the property with your personal belongings and live there on a daily basis within one year of settlement; and
- Not dispose of all or part of the property before you move in. Once again, the OSR advises that to retain the full benefit of the first home concession, you must not dispose of any part of the property for at least a year.
If you’re eligible for the first home concession, stamp duty will be calculated by taking the home concession rate and then deducting the first home concession from this. According to the OSR, if your home is valued at $500,000 or under, the first home concession amount will match the stamp duty you would normally pay based on the home concession rate, meaning you won’t have to pay any stamp duty at all.
The first home vacant land concession is only available when you acquire land to build your home on, as opposed to buying property which already includes a home. At the time of writing, the OSR states that the concession applies to vacant land valued under $400,000 and could save you up to $7,175. According to the OSR, if the vacant land is valued at less than $260,000, the concession will apply and mean that no stamp duty will be payable.
To be eligible for the first home vacant land concession you must meet the following requirements:
- Never have claimed the first home vacant land concession before;
- Never held an interest in a residence anywhere in Australia or overseas;
- Be at least 18 years old (this requirement may be waived by the government in certain circumstances);
- Build your first home on the land, move in with your personal belongings, and live there on a daily basis within two years of settlement;
- Only build one home on the land;
- Be certain there is no building, or part of a building, on the land when you acquire it; and
- Not dispose of all or any part of the property before you move in. As with the other two concessions, the OSR advises that to retain the full benefit of the first home vacant land concession, you must not dispose of any part of the property for at least a year.
What are the exemptions to paying stamp duty in Queensland?
In some circumstances, you will be exempt from paying any stamp duty. According to the OSR, some of the instances where you’ll be exempt from paying stamp duty could include:
- Death of property owner exemption – applies where the property is being transferred because someone has died. For example, if the property is being distributed from the deceased’s estate to the beneficiaries of their will, then the beneficiary or beneficiaries typically will not have to pay stamp duty to receive the property (or their shares of it).
- Transfer of interest in home to a spouse exemption – applies where property is being transferred to a spouse as a gift. In addition, after the transfer, you and your spouse must own the house as joint tenants (where you have equal ownership) or tenants in common in equal shares, and the property will be your main residence.
- Change of tenure exemption – applies where you’re changing co-ownership of the property from joint tenants to tenants in common in equal shares or vice versa, so long as the value of each co-owner’s interest in the property doesn’t change.
Other fees and finance considerations when buying property in Queensland
Other related fees
On top of stamp duty, you’ll also need to pay a mortgage registration fee (if you are 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. From 1 July 2018, the mortgage registration fee is $187 as set by the Queensland Government. The land transfer fee covers the cost of transferring the title of the property from the previous owner to you. From 1 July 2018, the land transfer fee for a single-lot house is $187, plus $35 for each $10,000, or part of $10,000, of the property value over $180,000.
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 Owners’ Grant
If you’re buying or building a brand new home and have never owned any Australian property that you’ve lived in, you might be eligible to receive the Queensland First Home Owners’ Grant. At the time of writing, the government will give those eligible $15,000 towards purchasing or building a new house, unit or townhouse if the value of the land and building is less than $750,000. While you can claim both the First Home Owners’ Grant and one or more transfer/stamp duty concessions, keep in mind that each has its own different eligibility requirements.
Stamp duty by Australian states and territories
Find out how much stamp duty you pay in different states and territories:
Image Source: Maythee Voran (Shutterstock)