As a mortgage broker who helps people obtain home loans in the Rockingham, Baldivis and Kwinana areas, my primary duties are to work with lenders to find you the right possible home loan for your situation. However, I am often asked a lot of questions about other facets of buying a home. One of those is stamp duty.
Stamp duty is a tax that is imposed on most large purchases in Australia, especially homes. It varies from state to state. For our purposes, we will be talking about WA stamp duty as it applies to housing. For real estate transactions, the purchaser is responsible for stamp duty, which must be paid on any property purchase.
How it Works
In WA, the first $80,000 is taxed at $1.90 per $100. From $80,001-$100,000, the tax is $1,520 (80 x $1.90) plus $2.85 per $100 for the part above $80,000. From $100,001-$250,000, the tax is $2,090 with $3.80 per $100 for the part over $100,000. Between $250,001 and $500,000, the tax goes up to $4.75 per $100 plus $7,790 for the first $250,000. Finally, houses over $500,001 are taxed at a rate of $5.15 per $100 plus $19,665 for the first $500,000.
This is obviously a graduated tax that charges larger purchases at a higher rate than smaller ones. There are some exemptions, though. The most important one for many is the exemption for all first home buyers of tax on the first $500,000. For most first home buyers, this means that they are fully exempt from stamp tax because they usually don’t spend over $500,000. However, the tax for homes between $500,000 and $600,000 is $22.51 per $100 for the part over $500,000.
There are some other exemptions, but for the most part they are few and far between. Stamp duty is a tax that most home buyers just have to allow when formulating their budgets.
What it Means to You
Stamp duty is just one of the many “hidden costs” of buying a home. It pays to be aware of all costs ahead of time so that they don’t become an unexpected burden when you are trying to buy a home.
Call 0400 204 408 to talk about your home loan.