Duty (previously known as stamp duty) must be paid when you buy any of the following:
Property (your home or a holiday home);
Vacant land or a farming property;
Commercial or industrial property; and
A business, which includes land.
You are also liable to pay duty if you acquire land, or an interest in land where no consideration has been paid. Duty is calculated on the property’s agreed sale price or on its market value, whichever is the higher.
You may also be required to pay duty on:
Establishing a trust over property;
Transferring an option to purchase land;
Foreclosing on a mortgage on property; or
Purchasing shares in an unlisted company
There are, however, some circumstances where you may be eligible for an exemption from duty. The most common exemptions are:
First Home Buyers Assistance Scheme;
If you are a beneficiary of a deceased estate; or
If the transfer is between married or defacto couples.
Duty must be paid within three months of entering into a Contract or on settlement, whichever comes first. For example, if you enter into a Contract for Sale and you have agreed on a settlement period of 30 days, the duty must be paid on or before the settlement date to enable registration of the Transfer into your name.
If you are purchasing off the plan (that is, buying a residential property where the home is to be built before the contract or transfer is completed), and you intend to live in the property for 6 months continuously, you may be eligible to defer the duty liability for up to 12 months. Should settlement occur earlier than the total 15 month period, you will be required to pay duty on the day of settlement.
Please note, the off the plan benefits are not available if you are purchasing vacant land.
If duty is not paid within the required timeframe, interest is charged on the duty that you owe to Revenue NSW. Revenue NSW are also able to charge additional penalties on the overdue amount.
Duty was abolished on the sale of business assets, including intellectual property, goodwill and statutory licences. However, you must still pay duty on the value of the land, including leasehold interests, fixtures and goods.
Under the Taxation Administration Act 1996, purchasers are required to provide information which enables Revenue NSW to assess whether the transaction is to be subject to the Foreign Person Surcharge Purchaser Duty, which is 8% of the total purchase price of the property.
The declaration confirms to Revenue NSW that you are an Australian Citizen for taxation purposes and that it qualifies you as exempt from the Surcharge Purchaser Duty and must be provided when the Contract and Transfer are stamped with duty.
First Home Buyers Assistance Scheme
First Home Buyers may be eligible for a full or partial exemption on duty under the above scheme.
To be eligible, you must meet certain requirements including be buying your first home in Australia, the property must be less than $800,000 and you must be intending on living in the property continuously for 6 months within the first 12 months of settlement occurring.
If you have any queries in relation to duty in NSW, please contact our office on 9525 8688.