Few people purchasing an ‘existing’ home are prepared for the shock that comes when they discover how much they have to pay, on top of the purchase price, in stamp duty. Stamp duty is a term used for land transfer duty. Put simply, it’s a tax that you pay to have a property transferred into your name. The amount you’ll pay is calculated as a percentage of the value or purchase price of the property.
The Big Stamp Duty Secret
Recently, when attending a community forum on strategies for local investment and growth in a regional Victorian town, the topic of stamp duty came up. People were complaining about the cost of stamp duty and how it makes it harder for mum and dad investors to afford property. The conversation went back and forth among the crowd for some time until I put up my hand and softly said, ‘Well, if you build a house, stamp duty is not a problem.’
And why isn’t it a problem? Because you don’t pay stamp duty on your house when you build. You only pay it based on the value of the land, which ultimately saves you thousands of dollars. Yes, I know, it’s a shock. I hope you’re sitting down.
There was a big look of dismay on the faces of everybody at the forum until the local MP, who was hosting the event, jumped up. I had visions of him giving me a standing ovation for my brilliance in revealing a simple fact, but instead he responded with a speech on how stamp duty is necessary for the economy and how you shouldn’t begrudge paying tax, and so on. He never once mentioned what I’d said or confirmed whether I was even right. I was made to feel like a dodgy two-bit salesman who was asking the crowd to commit tax evasion. It seems few people really get this whole stamp duty thing and how incredibly simple and legal it can be not to have to pay it on your home.
Click here to learn more secrets about how to save up to $67,950 or more on your new home.
The Real Cost of Stamp Duty
Your personal circumstances affect how much stamp duty you’ll pay, such as whether you’re buying a house to live in yourself, for investment, as a first home owner or as a pensioner.
Almost every article I read in the media about stamp duty fails to point out that if you build you don’t pay stamp duty on the value of the actual house. I have no idea why such a valuable benefit of building new homes is rarely discussed. I can only assume that it is because people just don’t know.
The amount of stamp duty you have to pay varies from state to state and, in some cases, is means-tested according to income and number of dependent children.
Stamp Duty is an additional cost, on top of the purchase price. You can calculate how much you'll pay in Stamp Duty by using our Stamp Duty Calculator below.
But here's the good news for those choosing to build a new home.
When you build a home, you don’t pay stamp duty on the house, as no transfer is taking place. You only pay stamp duty on the block of land you buy. And this is where the big saving is. This saving could mean the difference between you enjoying an alfresco dining area, a butler’s pantry or a major kitchen upgrade.
So, you can now see that the money you save on paying stamp duty by choosing to build is considerable. Would that make a difference to the way you spend your budget? Would it allow you to add some important features that significantly improve your family’s lifestyle?
My guess is that the answer is YES.