What taxes do you need to budget for when buying a property in NSW, Australia? This video gives an overview of stamp/transfer duty, GST & Surcharge Purchaser Duty you should know about. View video here: https://youtu.be/Wc4EGXBo6j8
TRANSCRIPT:
Buying a Property – What you need to know about Stamp Duty & GST (5 mins)
Hi everyone! My name is Alexandra and I am a lawyer practicing in Sydney, Australia.
This is the one of a series of videos I will be presenting on this topic setting out small-ish chunks of the legal process involved, which is also known as “conveyancing”. Today I’m going to talk a bit about everyone’s favourite topic – tax – what you need to know about stamp duty and GST before you enter into a contract to purchase property in NSW. Now, in Australia, the laws around property purchases are state-specific so if you are interested in buying a property located in NSW, this video is for you!
The first point to note is that this video series deals with residential property only, such as a house, unit or block of land and not with any type of commercial property.
As always please hit “SUBSCRIBE” if you like this type of content and give a thumbs up if you find the information useful.
A quick disclaimer that my videos are general and informational in nature only. They are not intended as legal advice, nor should you rely upon the content as legal advice. Please see the full disclaimer in the description box below.
So, you have found a property you want to buy, you’ve agreed on a price with the vendor or have a budget in mind if the sale is by auction – surely that’s it in terms of big ticket costs you need to budget for, right? Unfortunately not!
Stamp Duty
Whether you are buying a property by private treaty or by auction (and I recommend you check out my videos on purchase price and private treaty vs auction sales for more details on those topics), one thing to always remember is that the purchase price does not include stamp duty. Stamp duty – or transfer duty as it is also known – is a NSW state tax that is levied on all property purchases, unless you are eligible for some sort of transfer duty concession or relief, if any is available. It is paid by the purchaser of the property.
The amount of stamp duty is not written on the contract so its important to remember to factor it into your budget and home loan amount if necessary as it is additional to the purchase price. There is a transfer duty calculator online on Revenue NSW’s website because the amount of duty payable is directly correlated to the purchase price of the property. It is not a percentage, but determined by a scale. So, by way of example, as at July 2021, the amount of transfer duty on a property of $1 million is just over $40,000. So don’t forget to account for this!
A really important point to note if you are buying property in NSW and you’re not an Australian or New Zealand citizen, is that you may be classed as a foreign person by Revenue NSW and have to pay a surcharge on top of the regular rate of duty, called surcharge purchaser duty, which is currently eight per cent of the purchase price. So, using my earlier example of a $1million property – if you are classified as a foreign person you would be liable for regular transfer duty of approx. $40,000 PLUS surcharge purchaser duty of another $80,000, bringing the total amount of duty payable to just over $120,000 on top of the purchase price of the property.
What about Goods & Services Tax?
You will only need to pay GST on certain types of property if the vendor is registered or required to be registered for GST purposes. What does this mean? If you are purchasing an existing residential property, such as a house or unit, that is effectively “second hand”, then you are not liable to pay GST.
However, if the property you are purchasing is classified as ‘new residential property” or land that could be used to build new residential property (called “potential residential land”), then, unless an exception applies, you will need to pay GST when the purchase is completed. The GST should be included in the purchase price so the GST you pay on completion is calculated as 1/11th of the purchase price. The amount of transfer duty you pay is also calculated on a GST-inclusive basis.
So, that’s all I have for you today – remember to please “SUBSCRIBE” and hit the “Like” button if you liked this video, please share it if you know anyone who is thinking of buying their dream home and doesn’t know where to begin…
If you’d like to make an appointment to engage my services, please follow the link in the description box to contact me AND if you have any topics you’d like me to address in future videos, please leave a comment in the comment section as I’d love to hear from you. I hope you found this video helpful and thank you for watching.