The principle
Duty is a state tax on the transfer of property. Depending on the state it is called stamp duty, transfer duty or land transfer duty. It is calculated on the value of what is being transferred when the contract is made. If what you are buying is vacant land, the dutiable value is generally the land. The house does not exist yet, and a building contract is an agreement for construction work, not a transfer of property.
That is why a purchase structured as two contracts can attract less duty than buying the same home already completed. On a $650,000 package where the land is $300,000, duty assessed on $300,000 is a very different figure from duty assessed on $650,000.
When it does not work that way
- A completed home bought under one contract is generally dutiable on the full price.
- In some states, where the land contract and the building contract are closely linked, the revenue office can treat them as one arrangement and assess duty on more than the land value. Related sellers and builders, or contracts that depend on each other, are the usual triggers.
- Construction that has already started before you sign can be counted in the dutiable value.
- Concessions aimed at first home buyers and owner occupiers generally do not apply to an investment purchase.
- Some states charge additional duty for foreign purchasers, including some trusts.
State by state: who sets the rules
Rates and thresholds move, so we do not publish them here. These are the bodies that set and publish the current position for each state and territory.
- Victoria: State Revenue Office Victoria. The tax is called land transfer duty.
- New South Wales: Revenue NSW. Transfer duty.
- Queensland: Queensland Revenue Office. Transfer duty.
- South Australia: RevenueSA. Stamp duty.
- Western Australia: RevenueWA. Transfer duty.
- Tasmania: State Revenue Office of Tasmania. Duty on property transfers.
- Australian Capital Territory: ACT Revenue Office. Conveyance duty, which the ACT is reducing over time as it moves toward higher general rates.
- Northern Territory: Territory Revenue Office. Stamp duty.
Each office publishes a calculator. Run it on the land price for your state, then have your conveyancer confirm the result, because a calculator does not know how your contracts are structured.
Costs that sit beside duty
- Transfer and mortgage registration fees charged by the land titles office.
- Land tax, an annual state tax on land held as an investment, with its own thresholds in each state.
- Conveyancing or legal fees.
What to ask your conveyancer
- On what value will duty be assessed for this purchase, given both contracts?
- Is there anything in how the contracts are linked that could change that?
- When is the duty payable?
- What will land tax be once the land is in my name, or in the name of my trust?
We work across every state, so this question comes up on each purchase. The answer always comes from a licensed conveyancer or solicitor in the relevant state.