Calculating what stamp duty means to you

For those purchasing a property, stamp duty is important to consider, with many concessions and rebates existing to reduce the burden imposed by tax.

Stamp duty, according to State Revenue Commissioner Marcelyn Nicolaou, refers to a charge which is paid on all property transactions.

“It is paid on most property transactions, including the purchase of residential and commercial real estate, and the purchase of a business,” she said.

For those new to property, stamp duty is calculated slightly differently per state, so understanding each state’s guidelines and calculations is crucial.

In Western Australia, the payable rate of duty is categorised into five brackets – similar to how income tax is calculated, with amounts dependent on the encumbered value of the holding.

“Transfer duty is charged on the higher of the purchase price paid for the property, or its encumbered value, which is generally the market value of the property,” Ms Nicolaou said. “The general rate of duty is charged on transactions where there is no concession available such as the purchase of commercial properties and vacant land.”

For those purchasing a home, the stamp duty to be aware of is the residential rate of duty.

“The residential rate of duty is a concessional rate that applies to anyone purchasing a residential property such as owner-occupied homes, rental properties and holiday homes,” Ms Nicolaou said. “It also applies to purchases of vacant land where there is a contract to build a home on the land.”

Additionally, buyers who are not an Australian citizen, who are not a holder of a permanent resident visa or special category visa 444, must pay a foreign transfer duty when purchasing residential property in WA, according to Ms Nicolaou.

Although, stamp duty is an unavoidable expense, a variety of concessions and rebates exist to reduce its burden for those who qualify.

The first homeowner rate of duty is a reduced rate of duty that applies to eligible first homeowners purchasing a new home, purchasing vacant land and building a new home, or purchasing an established home,” Ms Nicolaou said.

For first-time owners purchasing vacant land and constructing a new home, to be eligible for the reduced rate, the land cannot exceed $400,000, while first homebuyers purchasing a new or established home must not exceed a home and land value of $530,000.

“In addition to the concessional rates of duty, there are a number of transactions where a nominal rate of duty ($20) or a full exemption may apply,” Ms Nicolaou said.

“These include transfers of the family home by spouse or de facto partner into joint names, transfers of property from family trusts to a beneficiary for no consideration and sales of property from individuals to their self-managed superannuation fund.

“Also included are transfers of property resulting from a marriage or de facto relationship breakdown, and distributions of property from a deceased estate to a beneficiary for no consideration.”

The State Government’s Off-the-Plan Duty Rebate Scheme offers savings of up to 75 per cent on stamp duty for purchasers buying an eligible off-the-plan unit or apartment.

Homebuyers Fred and Robyn Barrett were driven by this incentive and recently purchased a three-bedroom, two-bathroom apartment.

The couple said they used their $22,000 saving from the scheme to upgrade the flooring and kitchen appliances in the home.

“It was a no-brainer,” they said. “ We upgraded the parts of our home we’ll use the most, and it hasn’t cost us anything.”

Extended until October 24, 2023 in the State Budget last week, the Off-the-Plan Duty Rebate Scheme helps to promote investment in WA’s residential multi-tiered apartment market and creates more jobs in the construction industry.