STAMP duty is one of the major hurdles for would-be homebuyers around Australia, so it is important to understand what you are in for before applying for a mortgage.
Stamp duty is a tax that must be paid upfront when buying a property, which means that not only must a borrower save a deposit — which is hard work in a low interest rate environment — but also more than $20,000 extra in most cases.
The latest CoreLogic figures show that the average of the median house prices in all Australian capital cities is roughly $570,000. A 20 per cent deposit on a house of that price is $114,000, but by the time stamp duty is added — along with building and pest reports, conveyancing fees, mortgage application or approval fees, removalist costs and insurance — the upfront cost can be closer to $150,000, depending on where you live.
Victoria is the most costly state, with a $570,000 house costing $30,810 in stamp duty, transfer fees and mortgage application fees. This figure is revised down to $16,175 for first home buyers and from July 1 this year, first home buyers can avoid paying stamp duty on homes worth up to $600,000 provided they live in them for at least 12 months. New South Wales also has some concessions for first time buyers, with stamp duty reduced from the standard rate of $21,413, right down to $5,221. Of course, NSW houses for $570,000 are much harder to come by than other states and first homebuyer concessions are restricted mostly to new properties up to a value of $650,000.
The Northern Territory knocks $10,000 off its stamp duty of $28,499 for first home buyers, while South Australia charges everyone a hefty $29,713 on a $570,000 house.
That same house in Western Australia or Tasmania would set you back just over $21,500 in stamp duty, while the ACT takes $17,357 from the purchaser of the home and Queensland charges a relatively low $13,137.
Stamp duty must be paid within 30 days of a property purchase and goes straight into government coffers.
Mortgage Choice CEO John Flavell described the tax as a “cash cow” for some states.
“One of the biggest challenges for first home buyers is saving a deposit,” Mr Flavell said.
“We need state governments across Australia to think about this financial tax and potentially think about reducing it for all first home buyers.”
Published in the Gold Coast Bulletin by Tim McIntyre; 5th June 2017