Stamp duty is a tax placed on legal documents, usually in the transfer of assets or properties.
Each Australian state and territory has its own legislation for stamp duty and in Western Australia it is the Duties Act, 2008.
Simple enough? Then, let’s dig a little bit deeper!
One of the largest and sometimes unexpected costs in purchasing a property is stamp duty. In WA we refer to it as transfer duty. And, it’s really important to budget for it if you are contemplating purchasing property.
The legislation of each state (in WA’s case, the Duties Act, 2008) outlines the reductions and concessions in Duty that may apply to the buyer.
So, how much does stamp duty cost?
Well, this depends on what you, the buyer, are purchasing. However, the most common rates of duty are;
• General Rate
• Residential Rate
• First Home Owner Rate
The General Rate of Duty applies to most dutiable transactions that the Residential Rate of Duty cannot be applied. For example, commercial transactions, industrial and commercial vacant land and residential vacant land where no building contract has been entered into for the construction of a residence on the property.
The Residential Rate applies to places of residence. It is irrelevant whether the property will be occupied as a principal place of residence or is an investment property.
If you are purchasing vacant land and have entered into a Building Contract for the construction of a dwelling on the land, the Residential Rate of Duty can be applied.
The First Home Owners Rate of Transfer Duty applies, subject to eligibility, if the value of the property is below certain thresholds.
When do I have to pay Transfer Duty on my purchase?
Transfer Duty must be paid prior to settlement being complete.
How do I pay Transfer Duty?
In most circumstances there are two ways that you can pay Transfer Duty. These are;
1. Presenting the Contract for Sale, Transfer of Land document and cheque for the due Duty at the Office of State Revenue prior to settlement. At this time the documents will be duly endorsed.
Prior to the settlement date your Conveyancer or Solicitor will request the payment of Duty from you.
2. Completing the transaction using “Revenue On-Line” which is an electronic window to the services offered by the Office of State Revenue.
To complete your transaction using this method your Settlement Agent or Solicitor must be registered to utilise the service. Simply put, the registered person becomes a Tax Agent for the collection and payment of Duty on behalf of the Office of State Revenue.
This all sounds too complicated! What should I do?
Qualified conveyancers understand the systems, processes and timeframes that need to be adhered to when completing each element of a settlement, including paying the Transfer Duty fees. By employing a conveyancer to complete your settlement for you, you can be assured all items will be finalised at the correct time and date. Meaning, you can relax and enjoy your purchase!