February 13, 2017

What Government Fees am I up for When I Buy Property?

Buying a property includes all sorts of costs – lawyer’s costs, search fees, adjustments for rates, body corporate levies (if appropriate) and Government fees.

Government fees are applicable to EVERY purchase of property and include:

Stamp Duty

What is stamp duty?

Stamp duty is a tax imposed by the State Government on purchases, including of real estate. The tax is calculated on the market value of the property or the price paid, as in a Contract of Sale. If GST is payable then the stamp duty is calculated on the value of the property + the GST. The higher the price, the more tax is payable.

Stamp duty is payable by almost everyone so don’t forget to factor the charge into your buying costs. It can come as a nasty surprise if you don’t consider the stamp duty when working out your costs of buying a property.

There are some concessions and we will deal with them below.

Who collects the duty and when it is payable?

Law firms collect the stamp duty, on behalf of the Government, at the time of purchase. It can depend on the contract dates, time frames etc. as to when it is payable, however, in a normal average purchase, it is paid at the time of settlement.

The government has placed the responsibility for the collection of the stamp duty into the laps of law firms who must collect and pay the money to the Government within the time frame required. If you do not pay your stamp duty within the time frame, the Government will impose “unpaid tax interest” which can be quite hefty. You should always ensure that you have the stamp duty amount available when it is required.

How much stamp duty will I have to pay?

Most State Government websites have calculators available – for Queensland visit the Treasury Website.

Stamp duty rates can vary from state to state so you should always check with your lawyer regarding the rate payable as you may be entitled to a concession.

What are the concessions?

There are concessions for people who are buying their “principal place of residence”. There are separate and more generous concessions for first home buyers. The concessions are strictly policed and you will be required to make a declaration regarding your use of the property. Monetary penalties apply for making false declarations.

Exemptions are in place for transfers between husband and wife, de facto partners etc. and you should contact your lawyer for an explanation of these exemptions if required.

Titles Office Fees

Titles Office fees are payable in each transaction to enable the property to be transferred into the buyer’s name.

You should also ensure that these fees are factored into your costs when buying.

You can either use the Government website fee calculator or contact your lawyer to confirm the costs.

The Government collects these fees at the time of lodgement of the transfer document. The documents can be lodged by your lawyer (if you have paid cash for the property) or your bank (if you have finance).

Remember, these also work on the price of the property so the higher the price, the more fees are payable.