If you’re looking to buy a property or vehicle in Western Australia, you’ve likely come across the term “stamp duty”. But what exactly stamp duty, and how does it work? Don’t worry – we’ve got you covered with this easy-to-understand stamp duty guide.
Something we see frequently tripping up our clients is the concept of stamp duty, what it is, how much they will need to pay and how they can pay it. Every state and territory in Australia can have slightly different rules, exemptions and thresholds when it comes to stamp duty. Since we are mortgage brokers in Perth, Western Australia, we will be focusing here on stamp duty rules in WA.
In what can be an already confusing an overwhelming time, especially for first home buyers, it is a part of our job as award winning mortgage brokers to help explain and demystify the home loan process, so let’s start by explaining the basics of stamp duty in WA.
What is stamp duty?
What is Stamp Duty?
Stamp duty or ‘transfer duty’ is a state tax imposed on the sale of residential properties in Western Australia. The amount of stamp duty you are required to pay on your property purchase is dependent on a number of factors, including price of the property, location and whether or not you are a first home buyer.
It’s a one-off payment that you need to make when purchasing an asset like a house, land, or car.
Why do i have to pay Stamp Duty?
Stamp duty covers the cost to the WA Government of changing the property documents. The revenue is added into the state government budgets. Regardless on your thoughts on stamp duty, it is considered an important revenue source for the Western Australian government, helping fund public services like education, health, and infrastructure. While it may feel like an extra cost when you’re buying something big like a home or a car, it’s helpful to think of it as part of the broader tax system that helps keep the state running smoothly.
When Do i Pay Stamp Duty in WA?
In Western Australia, stamp duty is typically due when you:
- Buy a house or land (this includes residential, commercial, or rural property).
- Purchase a vehicle, such as a car, motorbike, or boat.
- Make certain transactions involving other types of assets, like business equipment or shares.
How Much Stamp Duty Will i Pay?
The amount of stamp duty you’ll pay depends on the price of the property or vehicle you’re buying, as well as a few other factors like whether you’re a first-time homebuyer.
Stamp Duty on Property
In Western Australia, stamp duty for property is calculated based on the purchase price or the market value (whichever is higher). Here’s a rough guide to how much you might pay:
$0 – $120,000: $1.90 per $100 or part thereof
$120,000 – 150,000: $2,280 + $2.85 per $100 or part thereof above $120,000
$150,000 – $360,000: $3,135 + $3.80 per $100 or part thereof above $150,000
$360,001 – $725,000: $11,115 + $4.75 per $100 or part thereof above $360,000
$725,001 and upwards: $28,453 + $5.15 per $100 or part thereof above $725,000
First-Time Homebuyers
If you’re a first-time homebuyer, you may be eligible for some stamp duty relief. For properties valued up to $430,000, you could pay little to no stamp duty, which can save you thousands of dollars!
Stamp Duty on Vehicles
When it comes to buying a car in WA, the stamp duty rate is based on the car’s market value or the amount you paid for it. The general rates for vehicles are:
- Up to $50,000: $3 per $100 of the vehicle’s value.
- Over $50,000: $5 per $100 of the vehicle’s value.
How is Stamp Duty Paid?
Stamp duty is an upfront cost that is paid on top of your deposit. You’ll need to factor in stamp duty when buying a house as it could mean saving even more money to cover off your deposit AND the stamp duty.
Ultimately, the actual payment of stamp duty is actioned by the bank or lender after settlement from funds the buyer provided prior to settlement.
When is stamp duty paid?
For property, the payment is usually made before the property’s title is transferred into your name. For vehicles, it’s typically paid when you register the vehicle.
Can stamp duty just be added onto my loan?
Unfortunately, you can not borrow the stamp duty on top of the property purchase price. In simple terms, you can think of it as one of two main costs to cover when you are purchasing a property using a mortgage. 1. Stamp Duty to be paid to the government 2. The minimum deposit required by the lender in order to be approved for a home loan. You will need to save enough money to cover both of these amounts before you can be approved for a home loan (assuming you tick the other eligibility requirements of the lender).
Many people are unsure of how stamp duty works, and forget to factor it into the overall cost of purchasing property (or a car).
How can I reduce the stamp duty I need to pay?
There are a few ways that you can reduce the amount of stamp duty you will be required to pay.
A lower house price
One way to reduce stamp duty is to negotiate the sale price of the property with the seller.
Consider building a house or buying off the plan
If you build a home, you’ll only have to pay on the expected value of the home once completed which could be less than the actual value depending on the market conditions. If you can find a well-priced block, you could save yourself thousands in stamp duty! In this case though it is important to keep in mind you will still be paying GST on the cost of the build, so it’s not as simple as just paying stamp duty on the land.
Take advantage of government incentives
For first home buyers, there is a concession on stamp duty for a property worth more than $430,000 but less than $530,000. Contact us to find out more about this concession or click here.
Transferring property between family
You may be eligible for a stamp duty exemption if you are transferring the property between family members.
Consult a mortgage broker
A broker or financial advisor can help you understand your requirements when it comes to stamp duty, and tell you how much you will need to pay.
While stamp duty can feel like an extra burden when purchasing property or a vehicle, knowing the rates and how it’s calculated will help you plan your finances better. Whether you’re a first-time homebuyer or simply purchasing a new car, understanding stamp duty is key to managing your expenses.
If you’re unsure about how much you’ll need to pay, or if you’re eligible for any exemptions, it’s a good idea to speak to a mortgage broker or use an online stamp duty calculator for an estimate.
Book an obligation free call with us today and we can tell you within minutes how much stamp duty you will need to pay.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute financial or professional advice. While we strive to provide accurate and up-to-date information, mortgage laws and regulations can change, and individual circumstances may vary. We recommend consulting with a qualified financial advisor or mortgage broker to assess your specific situation and needs. Base Home Loans is not responsible for any actions taken based on the content of this blog. Always conduct your own research and consider seeking professional advice before making financial decisions.
