KDD’s Guide To Transfer Duty A.K.A Stamp Duty in Property Settlements

Navigating the intricacies of buying property can be daunting, especially when faced with the added expense of stamp duty (now known as transfer duty). As one of the unavoidable costs in real estate transactions, transfer duty plays a significant role in the final price you pay for your new home. At KDD Conveyancing, we have over 25 years of experience with property taxes and can help you calculate how much you will need to pay, as well as advise you of the timeframe to lodge your payment. Read on to learn more about Transfer Duties according to the experts.

What Is Transfer Duty?

Transfer duty is a tax that applies to any real estate transaction and is paid before the settlement of the property occurs. But the amount one would have to pay for duties varies and is determined based on a number of factors:

The market value of the property being purchased (usually this is the purchase price).
Whether you are a foreign buyer.
Whether you are a first home buyer.
The type of property you are purchasing, for example, vacant land or an off-the-plan apartment.

If you are not a first home buyer or a foreign buyer, then it is estimated that the duties payable will be roughly 3-5% of a property’s purchase price. Very few exemptions apply and duties must be assessed for every property that is purchased. Often this adds a considerable amount to the total amount you’ll have to pay. You can utilise the Office of State Revenue’s Transfer Duty Calculator to work out an initial tax estimate.

Time Frame For Transfer Duty

The time frame for paying duties varies depending on the state or territory in which you are purchasing the property. In Western Australia all contracts must be lodged with the Office of State Revenue within two months of acceptance. Your conveyancer will do this on your behalf, so it is important that you nominate one within this two month period to avoid incurring penalty tax for late lodgment.

Once lodged, there are different time requirements for payment. For most standard sale transactions, payment is due upon settlement. For longer transactions, and for certain unique transactions, payment will be due within one month after a Duties Assessment Notice is issued, 12 months after the date of the transaction for land or mining tenements, or three years after the transaction date for subdivisions or issue of title agreements. It’s crucial to set aside the amount needed for duties when planning your property purchase.

Who Is Exempt?

Transfer duty is paid for every property purchased and as mentioned earlier, adds a lot onto the final total of the price you would pay for a property. Because of this, those who are looking to upsize, downsize or relocate choose not to as they cannot afford the tax that comes with buying another property. This means for a couple looking for a bigger house for their growing family, may find it harder to find something that is within their chosen suburb. Or a senior couple who need to downsize due to their health are unable to.

Certain exemptions do apply, in cases where eligible first home buyers are purchasing below the purchase price threshold (currently $450,000 for established properties) as well as spousal transactions (for example, transfers pursuant to a court order or the addition of a spouse to a principal place of residence).

Concessional rates also apply in some instances, for example, when purchasing off the plan.

Resources To Learn More About Transfer Duty

As you can see, navigating transfer duty can be difficult sometimes, so here are some helpful resources and tips to assist you in understanding duties payable:

Research WA specific guidelines. Each state in Australia has different guidelines, so it’s important to familiarise yourself with WA-specific rules and regulations.
Budget ahead of time. No one wants the unwelcome surprise of extra costs, so make sure you’re prepared for any duties owning.
Unfortunately, the only 2 guarantees in life are death and taxes, so transfer duty is most likely here to stay for most, but not everyone! It ’s worth looking into any potential discounts you may be eligible for.

Navigating With Confidence

If you’re considering purchasing a property, it’s crucial to be well-informed about all the costs involved. Why not contact us for a chat about your properties duty tax? Our knowledgeable staff members are ready to provide you with personalised advice and tips tailored to your specific situation, ensuring you have all the information you need to make a well-informed decision. You can also learn more about property taxes, settlement options and conveyancing information via our blog.

Related Articles:
1. Reaching out: When you should involve a conveyancer in a property deal
2. Buying a property off the plan-early and what to expect according to the experts
3. Property buyers: Vital things you should note about stamp duty for a smooth settlement