Stamp duty, unfortunately, is just something you have to endure when purchasing a property within Australia. Stamp duty is an upfront cost that cannot be added onto your home loan and it goes to the state government as a tax charged for transferring ownership of a property.
Although it varies state to state, Western Australia does have a fairly high stamp duty rate.
In WA, for a home valued over $500,000, you’re looking at paying around $19,000 plus $5.15 per $100 over $500,000. Whereas for a house valued at the same price in New South Wales, it’s around $19,000 plus $4.50 for every $100. It seems like a fairly large cost, doesn’t it? It is, so it pays to add this into your home buying calculations.
Generally, you can factor in having to pay 4% of the overall purchase of the property in stamp duty. The exact figure may vary as the tax does fluctuate from time to time. There are numbers of contributing factors but a lot of the time it comes down to availability and the number of properties within an area that are valued at a particular price.
You shouldn’t let stamp duty deter you from purchasing a home, as there are a number of groups and people that are exempt from paying it at all. These incentives are put in place to encourage people to buy instead of rent homes. Unlike in some other states, Western Australia is fairly strict when it comes to exemptions from stamp duty but usually first home buyers, family farms and, in some cases, when you buy off of a plan, you can apply for an exemption.
If you apply for a First Home Buyers Grant in Western Australia you can then be considered for exemption or a reduction in the stamp duty. This means you could have to pay part of the fee, but not all.
Make sure you apply as early as possible as it can be a lengthy process. If your family owns a farm (it has to be of certain acreage and be in use) and there is transferal of ownership within the family, you are usually found eligible for the exemption.
This is also the case with de facto and partnerships if you are transferring the ownership to the other person. Also, if you are looking to buy off the plan, meaning you agree to purchase an apartment or property that is yet to be built (you’ve just seen the designs and plans) you should definitely look into whether you are eligible for the stamp duty exemption.
As always, it’s best to check with your mortgage broker and solicitor to find out all the costs you’ll be liable to pay at settlement.