Stamp duty — formally known as transfer duty in most states — is a tax levied by state and territory governments on the purchase price of a property at the time of title transfer. It is one of the largest transaction costs in a property purchase and must be paid before or at settlement.
Who pays it. The buyer pays stamp duty. It is not shared with the seller and is not included in the purchase price — it is an additional cost on top of the property price.
How it is calculated. Each state and territory sets its own stamp duty rates and progressive thresholds. The tax is calculated on the dutiable value of the property (generally the purchase price or market value, whichever is higher) using a tiered rate structure where higher portions of the price attract higher rates.
First home buyer concessions. Most states offer stamp duty concessions or exemptions for first home buyers purchasing below set price thresholds. These do not apply to investment properties.
Foreign purchaser surcharge. Non-Australian residents pay an additional surcharge (7–8% of property value in most states) on top of standard stamp duty. Some states also apply a surcharge to foreign-owned corporations and trusts.
When it is paid. In most states, stamp duty is payable within 30 days of settlement (though some states require payment earlier). It must typically be funded from cash or equity — it cannot usually be borrowed as part of the mortgage.
Planning for stamp duty. Investors should factor stamp duty into total acquisition costs before calculating return on investment. On a $700,000 property in New South Wales, stamp duty is approximately $27,440.
