You might have heard the term stamp duty at your mortgage broker’s office – but do you understand the guts of it? In this post I’m going to break it down stamp duty easily for you. I’ll show you how you can make your stamp duty more affordable, so that you can save your hard-earned money for more exciting things.
Let’s get cooking.
What is stamp duty?
Stamp duty is a government tax. It’s a levy charged when a property changes ownership, and the new property owner is the one who pays it. Every state has its own stamp duty rate, so if you’re buying a home in Sydney, this post applies to you. If you know someone buying a home in Sydney, make sure you forward this post to them before they settle on a property!
How much is stamp duty
No matter the price of a property, stamp duty is applied. Whether you’re purchasing a home to live in, or buying a home to lease, there are seven bands for calculating stamp duty:
| Value | Calculation |
| $0 – $14,000 | $1.25 for every $100 or part of the value |
| $14,001 – $30,000 | $175 plus $1.50 for every $100, that the value exceeds $14,000 |
| $30,001 – $80,000 | $415 plus $1.75 for every $100, that the value exceeds $30,000 |
| $80,001 – $300,000 | $1,290 plus $3.50 for every $100, that the value exceeds $80,000 |
| $300,001 – $1m | $8,990 plus $4.50 for every $100, that the value exceeds $300,000 |
| over $1m | $40,490 plus $5.50 for every $100, that the value exceeds $1,000,000 |
| Premium Property Duty: over $3m | $150,490 plus $7.00 for every $100, that the value exceeds $3,000,000. |
Which brings me to our first step for paying your stamp duty without breaking bank.
Step one: calculate your stamp duty
Once you’ve found The One – that suburban or inner city castle you’re sure you’re destined to make your nest – hop online and find a stamp duty calculator. The government websites are the safest best, check out the one for NSW.
Step two: calculate all other costs
After you’ve calculated the price of your stamp duty, you’ll need to consider the other costs that accompany home ownership. The price of your home includes the actual building itself and the land, but there are a list of factors which affect the total price of buying a home.
Understanding all of the costs is key to affording stamp duty, and of course, your mortgage repayments.
Add up these extra costs to your stamp duty:
- Lender’s Mortgage Insurance (LMI) if your deposit is a bit on the small side
- Conveyancing
- Strata fees for apartments
- Council rates
- Building insurance
- Removalists
- Building renovations
Now that you’ve got a better idea of how much your property will cost in full, you’ll be better placed to apply for the right mortgage for you. And when you have the right mortgage, you’ll be less likely to fall into mortgage stress, and will be able to keep on top of your mortgage repayments.
Step three: apply for a grant
If you’re a first homebuyer – congratulations! There’s not much in life like finally getting the keys to your very own home. And you know what makes that feeling so much sweeter? Stamp duty grants for first homebuyers.
If you’re a first homebuyer purchasing a brand new home or land in NSW valued up to $550,000, you could be eligible to apply for an exemption via the First Home – New Home Scheme. Cha-ching.
And if your home is price up to $650,000, you could also get a decent concession on your stamp duty.
There are of course a few terms and conditions which you can check out on the government website.
But the good news doesn’t stop there. First Home Buyers also get a cash grant under the First Home Owner Grant (New Homes) scheme.
But wait there’s more. There are also grants of up to $5,000 for those buying brand new homes or vacant land via the New Home Grant Scheme. This is great news for those checking out the new homes in Sydney.
The pride and peace of mind of owning your own home is priceless. And with all of your home owning costs in mind, and maybe a little leg up from the government, you’ll be well on your way to owning your own place in no time.