Stamp duty, known as transfer duty and administered by Revenue NSW in New South Wales, is a tax placed on the value of property being bought. Stamp duty is imposed on ‘dutiable transactions’, including transfers of shares or units and transfers of ‘dutiable property’ such as land. Concessions and exemptions from stamp duty include the first home buyers assistance scheme. The Duties Act 1997 regulates how stamp duty is imposed and how much duty is payable. Revenue NSW revenue rulings provide some guidance on how stamp duty is imposed and how concessions and exemptions are applied.
Which transactions attract stamp duty?
Stamp duty is imposed on ‘dutiable transactions’. The Duties Act 1997 defines a ‘dutiable transaction’. A common kind of ‘dutiable transaction’ is a transfer of ‘dutiable property’ or an agreement to sell or transfer ‘dutiable property’. Other kinds include:
- declarations of trust (e.g. if you hold property on trust for another person);
- mortgage foreclosures; and
- entering into a lease under which you must pay a premium
What is dutiable property?
‘Dutiable property’ is defined very broadly in New South Wales. It includes:
- land;
- shares and units which are not quoted on the ASX;
- options to purchase land; and
- ‘business assets’.
What must I do?
Generally, the person who purchases the dutiable property is the one who must pay stamp duty. When the liability to pay duty arises depends on the type of dutiable transaction entered into. For example, if the transaction is:
- a land transfer, the liability arose at the time of the transfer; or
- a declaration of trust, the liability arose when the declaration was made.
In order to pay stamp duty, an agreement under which the transaction occurred must be lodged with Revenue NSW for stamping. You may also have to lodge a form if, for example, you are claiming an exemption from duty or if the dutiable transaction occurred without a written agreement.
The lodgement must be made and the duty must be paid within three months of the liability to pay stamp duty arising. If you fail to comply with these strict deadlines, you may be required to pay penalties or interest on top of the duty.
How much stamp duty is payable?
How much duty you must pay depends on the ‘dutiable value’ of the transaction and the kind of property that is transferred. The ‘dutiable value’ is usually the greater of the amount paid for the property, and the property’s value free from any encumbrances.
Different rates of stamp duty apply in the case of land, depending on the ‘dutiable value’. For example, if the ‘dutiable value’ is more than $1,033,000, the duty payable is equal to the sum of $41,820 plus $5.50 for every $100 over $1,033,000. These rates reduce as the dutiable value of the property decreases. Different rates can however apply in certain cases to residential land that is transferred.
Concessions and exemptions
There are several exemptions and concessions from stamp duty in New South Wales. These depend on the kind of property being transferred, and the relationship between the buyer and seller.
For example, if you are married and you transfer an interest in residential land to your spouse, the transfer may be exempt from stamp duty. Transfers made after separation of a de-facto or married couple may also be exempt from stamp duty if they are made as part of the division of matrimonial property.
Shares and units quoted on the ASX are not dutiable property so stamp duty is not payable on their transfer.
The first home buyers assistance scheme
If you are a first home buyer in New South Wales and you purchase a house with a value of less than $650,000, you may be entitled to an exemption from stamp duty for the purchase. Whether the exemption is available will largely depend on whether you or your spouse have owned or co-owned residential property in Australia before.
If the value of the house is between $650,000 and $800,000, you may also be entitled to a concession from stamp duty.
What now?
Contact us for legal advice or representation in any legal matter.
