What is this arbitrary tax, and what changes are being made in the ACT?
Stamp duty is a Government-imposed tax that is paid within 90 days of signing a contract to buy a property in Canberra. If we are spending a big wad of cash (even if it is the bank's in many cases) then the Government wants in!
The amount varies with the value of the property bought, with concessions for particular groups in the community. For example, first home purchasers and residents over 60 years of age who are downsizing. There are eligibility requirements to obtain these concessions, which change frequently! Full details of the current hoops to jump through can be found on the ACT Revenue Office website.
The rest of us have to add this hefty sum into the cost of buying a property. Good news and bad news for you. The ACT Government (we don't have councils, just one rather clunky local-slash-state Government body) have decided to wind back stamp duty. Gradually, mind you. In exchange, every property owner across the Territory will be paying more in their annual rates bill. Coupled with rising electricity and water costs, there are more than a few irate residents.
However we do have excellent education, good roads and low crime in the ACT and many health facilities and hospitals have received an upgrade and/or modern renovation. The bill must be paid somehow!
So what's the damage - what are you up for? (These rates are current for transactions after 4 June 2014)
If you've managed to find a place for under $200,000, I hope it's habitable. Well done you. Your stamp duty amounts to the grand sum of $20 or $2 per $100 (whichever is the greater).
Between $200,000-$300,000, stamp duty is calculated as $4,000 plus a little bit more. $3.50 per $100 (or part thereof) by which the value exceeds $200,000.
Between $300,001-$500,000 the cost is $7,500 plus $4.15 per $100 (or part thereof) by which the value exceeds $300,000.
Are you still with me? Gripping stuff, I know. But the nitty gritty costs must be known and added to your costs. Hang in there.
Between $500,001-$750,000, which currently represents the median house price in Canberra and therefore the bulk of property prices, stamp duty is worked out as a lump sum of $15,800 plus $5 per $100 (or part thereof) that the value exceeds $500,000. Canberra's median house price stands at $535,000 at the time of writing, so stamp duty on the average house is $17,550. Don't give yourself a headache, put your phone or calculator down and use the Government's own nifty little calculator. Just check to ensure you've selected the appropriate rates for the date of your transaction.
From $750,000-$1m, rates are $28,300 plus $6.50 per $100 (or part thereof) by which the value exceeds $750,000.
Moving up to the $1m-and-one-dollar to $1,454,999 bracket - no I didn't make that number up - stamp duty is $44,550 plus $7 per $100 (or part thereof) by which the value exceeds $1m.
And lastly, the catchall for everything above $1.455m, be prepared to hand over $5.25 per $100 of the total value. On a quality home in a popular leafy suburb, say $1.8m, stamp duty would be $94,500.
Now you know, forewarned is forearmed! Go forth and find your home with the knowledge that you won't be paying as much stamp duty as someone else did in May 2014. Your solicitor will confirm the amount of stamp duty you're liable for, and will give you details of how and when to pay this once you've signed a contract to purchase an ACT property. If they don't, warning bells should be ringing. You can always ask me for a referral or two.
If you need someone to take the hard work out of finding your ideal property, plus someone who negotiates for a living (it's one of my favourite parts of the job!) then don't hesitate to contact me. Not only will your stress levels decrease immediately, we can have some fun along the way. I'm always here to help.