What is stamp duty?

How stamp duty is calculated

Stamp duty works a bit like income tax brackets, progressive rates that increase as the purchase price rises, so the more expensive the property, the higher the effective rate on the upper portion of the price. A few rules apply everywhere: it's calculated on the contract price or market value, whichever is higher (you can't deflate the price to reduce your duty), it's a state tax, not federal, so each of Australia's eight states and territories sets its own rates and thresholds, and owner-occupiers often pay less than investors in states that offer a home concession rate.

The gap between states is real and can be large. On an established home priced around $600,000, for example, an owner-occupier buyer in Queensland typically pays roughly $13,000 in duty thanks to that state's home concession rate, while the same purchase in Victoria can run north of $30,000. Treat any figure you see quoted, including this one, as a rough guide rather than gospel, rates and thresholds move often. Our Stamp Duty Calculator has each state's current figures modelled for an exact number based on your purchase price, state and buyer type.

First home buyer concessions

Most states offer meaningful stamp duty relief for first home buyers, often worth tens of thousands of dollars, so this is one of the most important things to check before assuming what you'll owe. The shape of the concession varies a lot: some states offer a full exemption up to a set price with a taper above it (NSW, for instance, exempts first home buyers entirely up to $800,000, tapering out by $1,000,000; Victoria exempts up to $600,000, tapering out by $750,000), others restrict the concession to new builds or off-the-plan purchases, and a couple have been phasing stamp duty out for first home buyers altogether in recent years.

Eligibility conditions typically require you to buy as an owner-occupier rather than an investor, move in within a set period and live there for a minimum time, meet citizenship or residency requirements, and not have owned residential property anywhere in Australia before. Because thresholds, price caps and even whether established homes qualify (some states limit new-build and off-the-plan purchases to the full concession) change from state to state and are revised fairly regularly, check your state's current settings through our Stamp Duty Calculator or directly with your state or territory revenue office rather than relying on a number you saw somewhere else, including a figure that was accurate a year or two ago.

When stamp duty is paid

Generally, stamp duty is due at settlement, the day ownership legally transfers to you. In some states you technically have a window of time after signing the contract, but in practice your conveyancer handles payment on settlement day.

The important thing to understand: stamp duty isn't part of your home loan. Lenders almost never roll it into the mortgage, which means it comes straight out of your savings, on top of your deposit. That directly reduces the cash you have available and can affect your borrowing power, so it's worth factoring stamp duty into your savings target from day one, not as an afterthought once you've found a place.

What stamp duty doesn't cover

Stamp duty is the big one, but it's not the only government cost at settlement. A mortgage registration fee and a transfer fee are both small, usually under a few hundred dollars each. Lenders Mortgage Insurance (LMI) is a separate and much bigger cost again if your deposit is under 20% of the purchase price, it can run into the thousands or tens of thousands and has nothing to do with stamp duty. Budget for all of these separately.

Is stamp duty tax-deductible?

For owner-occupiers, no, it's a personal cost with no tax benefit. For investment properties, stamp duty isn't immediately deductible either, instead it's added to the property's cost base for Capital Gains Tax purposes, which reduces your taxable gain when you eventually sell. It's a future benefit rather than an immediate one, worth discussing with your accountant for how it applies to your situation.