Transfer Duty (NSW)
Stamp duty, known as transfer duty in New South Wales, is a tax placed on the value of property being bought. The dutiable value is usually the property’s value on the open market. The tax is collected for the State Government by Revenue NSW and must be paid by the buyer within 3 months of the purchase. It is governed by the Duties Act 1997.
When does transfer duty apply?
Transfer duty must be paid when a person buys:
- a home or holiday home;
- an investment property;
- vacant land or farming land;
- commercial or industrial property; or
- a business which includes land.
The duty must also be paid when land or an interest in land is acquired without payment, such as via a declaration of trust, a gift, or a change in ownership. A concession or exemption can be available in some circumstances, such as when a person is a beneficiary of a deceased estate or the transfer is between a married or de facto couple.
A solicitor or conveyancer normally lodges an application for transfer duty assessment, and arranges for the duty to be paid, as part of a property settlement.
How is transfer duty calculated?
As with income tax, transfer duty is calculated using a sliding scale. The standard rates are:
Property value $0-$14,000 – $1.25 for every $100 or part
$14,001-$30,000 – $175 plus 1.5% of the value over $14,000
$30,001-$81,000 – $415 plus 1.75% of the value over $30,000
$81,001-$304,000 – $1307 plus 3.5% of the value over $81,000
$304,001-$1,013,000 – $9112 plus 4.5% of the value over $304,000
Over $1,013,000 – $41,017 plus 5.5% of the value over $1,013,000
Over $3,040,000 – $152,502 plus 7% of the value over $3,040,000
First home buyer exemption/concession
A first home buyer duty exemption applies to an existing home valued up to $650,000. A concession applies to an existing home valued between $650,000 and $800,000, with the amount depending on the value.
A first home buyer duty exemption applies to a new home valued up to $800,000. A concession applies to a new home valued between $800,000 and $1,000,000, with the amount depending on the value.
A first home buyer who buys vacant land pays no transfer duty on land valued up to $400,000. A concession applies to vacant land values between $400,000 and $500,000.
To qualify, the buyer must be an individual (not a company), aged over 18, who (as well as their spouse or partner) has never owned or co-owned property in Australia and never received a first home buyer duty exemption or concession. Also, at least one of the buyers must be an Australian citizen or permanent resident.
The buyer must move into the home within 12 months of buying it, and live there continuously for at least 6 months.
Transfer duty liability can be deferred for up to 12 months when an off-the-plan agreement is signed, or when the property is completed or handed over, whichever happens first. This applies if the property is to be sued as a main residence.
Foreign buyers must pay an 8% surcharge, known as a surcharge purchaser duty, in addition to transfer duty. A person is considered a foreign person unless they:
- are an Australian citizen;
- have lived in Australis for more than 200 days in the 12 months before the purchase;
- are a New Zealand citizen who holds a subclass 444 visa; or
- are a permanent resident of Australia.
If a business sale includes land or an interest in land, such as a lease, transfer duty must be paid, and within 3 months of the business sale agreement. The value of a business for transfer duty purposes includes plant and equipment, and shares and units, but generally will not include stock in trade, farm assets, livestock and registered vehicles.
Transfers of property between family members incur transfer duty but some qualify for an exemption or concession.
Transfer duty does not have to be paid when property is transferred between a married or de facto couple if the property is the principal place of residence or vacant land on which the principal place of residence will be built, and the property is then held equally by both partners. If the family home is used for business purposes, the exemption applies to only the residential part of it.
An exemption may apply to a property after a domestic relationship breaks down. For the exemption to apply, the property must be transferred to:
- the partners in the couple, or either of them;
- a child or children of either partner;
- a trustee for the child or children.
Deceased estate transfers
A beneficiary who receives property from a deceased estate must pay transfer duty at a concessional rate of $50.
Bushfire duty relief
This scheme applies to people whose homes were destroyed in the 2019/20 NSW bushfires and who chose to buy elsewhere rather than rebuild. Those buyers are either exempt from paying transfer duty, pay a reduced amount, or receive a refund on all or some of the duty paid. The application period expires on 2 March, 2022.
For advice or representation in any legal matter, please contact Armstrong Legal.