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Understanding stamp duty

Stamp duty is an important part of every property transaction.

Buyers must be conscious to factor in this fee when setting their budget as it can cost up to tens of thousands of dollars depending on the price of the property. 

But what is stamp duty, how much is it and why do you need to pay it? 

What is stamp duty?

Stamp duty, recently renamed to land transfer duty, is a Victorian tax imposed on the purchaser when they buy a property. 

Stamp duty is paid to the State Revenue Office (SRO) and, as it is a state duty, it is collected by the Victorian Government. 

The Victorian Government collected approximately $6 billion of stamp duty in FY19, according to the SRO, and uses the money to fund education, hospitals, roads and other essential state services.

How is stamp duty calculated?

Stamp duty is calculated on the dutiable value of your property. This is the price you paid for the property, or its market value, whichever is greater.

According to the SRO, duty is calculated on a sliding scale, starting at 1.4% for properties valued at $25,000 and rising to 5.5% for those valued at or above $960,000.

You can calculate an estimated land transfer duty using the Victorian State Revenue Office online calculator. 

It is important to remember these calculations are an estimate only, and the SRO emphasise  they should only be used for reference purposes. 

When do you pay stamp duty?

The buyer must pay the stamp duty within 30 days of settlement. If the duty is not paid within 30 days of settlement, penalty tax and interest may apply.

This is done by completing a digital duties form, which is mandatory for all property transfers. If you use a qualified conveyancer to purchase the property, they will complete the digital duties form on your behalf. 

If you are an individual, and do not use a conveyancer, you must register for Duties Online with the SRO. After your register, you can log into Duties Online and lodge the digital duties form electronically. 

More information on the process to pay stamp duty can be found here. 

You must pay stamp duty within 30 days of settlement. 

Concessions, exemptions and additional duty

There are different rules depending on the type of property and the type of purchaser which impact how much stamp duty you pay. 

The SRO outlines that your land transfer duty depends on whether the property is:

  • Your primary residence or whether it will be an investment property
  • Whether you are a first home buyer or not
  • Whether you are purchasing an established home, new home or vacant land
  • Whether or not you are a foreign purchaser

These are all important considerations when looking at how much stamp duty you’ll have to pay. 

Primary place of residence

If you are a buyer and you purchase a property that you intend to live in as your principal place of residence for a continuous period of 12 months, within 12 months of settlement, then you may be entitled to a concession from duty. 

This is the principal place of residence concession, which you can apply for on the State Revenue Office’s website. 

There are rules and exclusions regarding this concession. For example, it is only available to home buyers whose property is less than $550,000 and only available to habitable dwellings, meaning vacant land is not eligible.

Foreign purchaser additional duty

If you are a foreign purchaser and you purchase residential property in Victoria, in addition to the land transfer duty you may also have to pay foreign purchaser additional duty. 

Find more information on the foreign purchaser additional duty here

First home buyer exemption or concession 

First home buyers may also be entitled to some relief from duty

An exemption or concession may be available to first home buyers, in addition to the First Home Owner Grant. 

Whether you are entitled to the exemption or concession depends on the price of the property you intend to purchase.

 If your home has a dutiable value of $600,000 or less you may be entitled to the first home buyer duty exemption.

 If the property has a dutiable value of between $600,001 and $750,000, you may be entitled to receive the first home buyer duty concession.

In order to be entitled to the exemption or concession, all of the purchasers must meet the First Home Owners Grant eligibility criteria and one purchaser must meet the residency requirements. 

Government considering changing stamp duty 

Earlier in the year the Victorian Government announced they might consider scrapping stamp duty payments for new homeowners in favour of annual land tax payments. 

This means that homeowners would pay an annual land tax fee over several years instead of being hit by a lump sum stamp duty fee at the time of settlement.