Stamp Duty And Government Charges
The Hidden Fees When Buying A Property

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Buying a property, specifically your first property, can often be a stressful, nerve racking time.

Your conveyancer should advise you of all legal costs and government charges associated with the purchase of your property, including the government charges and registration fees which you are liable to pay at settlement. They should also assist with the completion of the requisite State Revenue Office Duties Form, which is now completed via the State Revenue Office website.

Government charges and registration fees include:

  • Stamp duty you will pay on the purchase price of the property;
  • Land Titles Office registration fee on the transfer of land;
  • Land Titles Office registration fee on the vendor’s Discharge of Mortgage; and
  • Land Titles Office registration fee on your new mortgage.

 

Stamp Duty

Stamp duty is a tax levied by all Australian territories and states on property purchases.

The stamp duty a buyer pays at settlement is based on the purchase price of the property and can further be determined by some of the following:

  • if you are a first home buyer buying an established or new home;
  • if you hold a relevant pensioner concession card;
  • if the property will be your principal place of residence following settlement for a period of 12 months;
  • if the property will be used for investment purposes;
  • the portion or share of the property you are buying; and
  • if you are a foreign purchaser.

It is vital that you factor in to your finances the amount of stamp duty payable by you at settlement.

If you have a bank advancing funds to enable settlement, you should speak to your lender about whether stamp duty has been factored in to your loan advance or whether you will need to provide this as additional funds at settlement yourself.

If your lender requires you to provide the stamp duty as additional funds, then they will most likley have you sign a shortfall authority so the stamp duty and any further shortfall can be drawn down by them from your nominated bank account at settlement.

 

Additional Stamp Duty

Additional stamp duty applies if you fall in to one of the following categories:

  • you are a foreign natural person*;
  • you are purchasing the property in the name of a foreign corporation; and
  • you are purchasing the property in the name of a foreign trust.

*You are a foreign natural person if you are not:

  • A citizen or permanent resident of Australia; or
  • A New Zealand citizen with a Special Category Visa (Subclass 444)

The rate of additional stamp duty is also determined upon when you purchase the property. For example, if you enter in to a contract of sale for the purchase of property on or after 1 July 2015 but before 1 July 2016 (even if the settlement date is on or after 1 July 2016), the additional stamp duty you would be liable to pay is 3%.

If you enter in to a contract of sale for the purchase of property on or after 1 July 2016, the additional stamp duty you would be liable to pay is 7%.

However you may be eligible for certain exemptions or concessions so it is important to speak with your conveyancer about your individual circumstances.

 

Stamp Duty Concessions

Depending on your individual circumstances, you may be eligible for a stamp duty exemption or concession (reduction) if you are buying a property that will be your principal place of residence for at least the first 12 months after settlement.

To obtain the concession or exemption that applies to you, you must speak to your conveyancer so that the correct stamp duty can be calculated prior to settlement.

For further details in relation to all stamp duty exemptions and concessions available visit https://www.sro.vic.gov.au/.

 

Stamp Duty Calculators

If you are crunching the numbers but haven’t found the right property as yet, the State Revenue Office have a range of calculators that assist with the calculation of stamp duty applicable to your circumstances.  Visit https://www.sro.vic.gov.au/calculators/land-transfer-calculator to calculate your duty.

 

Land Titles Office Registration Fee on the Transfer of Land

At settlement you will be required to pay a Land Titles Office registration fee on the Transfer of Land, which is calculated on the purchase price of the property.

Your conveyancer will advise you how much the registration fee is on your Transfer, however if you are working on your budget before you commit to buying then you might want to have an idea of what the registration fee will be.  Visit https://www.propertyandlandtitles.vic.gov.au/forms-guides-and-fees/fees#Transfer_of_Land_Act_fees_calculator_201819 to calculate the registration fee on your transfer.

You should speak to your lender to ensure this amount is factored in to your loan advance.

 

Land Titles Office Registration Fee on the Vendor’s Discharge of Mortgage

You may ask why you would need to pay the registration fee on the vendor’s discharge of mortgage.  This is because at settlement the vendor’s bank will deliver a discharge of the vendor’s current mortgage along with the original title to the property so either your conveyancer or lender can register the title in to your name.

The vendor will reimburse you for the registration fee on the discharge of mortgage at settlement and the fee will be allowed for in the statement of adjustments that your conveyancer will prepare on your behalf.

You should speak to your lender to ensure this amount is factored in to your loan advance.

 

Land Titles Office Registration Fee on your new Mortgage

Your lender will require you to pay the Land Titles Office registration fee on your new mortgage at settlement (if you have a lender advancing funds to assist with your purchase).

You lender will normally allow for this registration fee in your loan advance, however you should confirm this directly with your lender well prior to settlement.

The above are the most common government charges and registration fees that you will be required to pay at settlement.  If you believe that you will be required to pay additional fees then you should seek the advice of your conveyancer well before settlement.

Should you have any questions relating to the government charges and registration fees you may be required to pay when purchasing a property, feel free to give our friendly, experienced conveyancing team a call.

 

 

Please note the above is intended to be commentary and general information. Commentary and general information should not be relied upon and substituted for legal advice. Formal legal advice should always be obtained, if you would like to receive advice specific to your circumstances please contact our office on 9743-1333.