Imagine you have been scrolling through endless property listings for weeks on end, until one home catches your eye. You inspect the property and obtain the necessary financial and legal advice. This is the one, your dream home. But wait, what about stamp duty?
Conveyance duty or more commonly referred to as stamp duty, is a tax payable by a buyer when purchasing property. The name itself originates from the physical stamp that used to be placed on documents to illustrate that tax had been paid on the purchase or sale agreement. In each State and Territory, stamp duty is payable by a buyer on the purchase of property (with some exemptions and concessions of course) and each have slightly different methods for calculating the amount payable.
In the ACT, the rate of stamp duty is reducing, albeit slowly.
The amount of stamp duty payable is based on the consideration paid by the buyer or the market value of the property, whichever is the greater. That price or value then falls within a particular price bracket to which a sliding scale is applied. Whilst this might seem complicated, a helpful calculator is available from the ACT Revenue Office website to assist prospective buyers.
The liability for stamp duty arises upon the exchange of contracts, being the date of the ‘transaction’.
In the ACT, we have a barrier free model and stamp duty is payable after settlement. The notice of assessment, specifically the amount of stamp duty to be paid, how it is to be paid and when it needs to be paid by (14 days after registration) is issued by the ACT Revenue Office upon registration of the transfer. A failure to pay on time will result in penalties and interest being payable.
There are several exemptions and concessions available, however it is important to identify and obtain advice regarding your eligibility for an exemption or concession before signing the contract for sale. If contracts are exchanged, you will likely be bound to proceed with the purchase even if you find out afterwards that you are not eligible for the exemption or concession.
If you are looking to buy a property and would like further advice, please do not hesitate to contact the BAL Lawyers Property Team on 02 6274 0999.