Understanding Transfer Duty in Australia: Tips to Avoid It

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Despite the huge amounts of transfer duty (also called stamp duty) being paid each year, many Australians find the concept confusing. This is largely because this fee is collected by state governments – so the rules may change significantly depending on where you live. This then begs the question, can you learn how to avoid transfer duty? Can you really avoid it and not get in trouble for doing so?

Stamp duty and how much you’ll pay is one of the most important factors to consider when applying for a Sunshine Coast home loan. Despite this, many homeowners don’t really understand how it works. According to the latest information from the Australian Bureau of Statistics (ABS), Australians paid a whopping $23.97 billion in transfer duty during 2020-2021. That figure accounts for more than 20% of all tax revenue collected by state and local governments. 

How to Avoid Transfer Duty: Does Everyone Have to Pay?  

If you’re a first home buyer on the Sunshine Coast then you’re likely wondering: what is QLD transfer duty? And is there a transfer duty exemption in QLD for first home buyers? In this article, we’ll break down what Queensland transfer duty is, what concessional rates may apply, and how to avoid stamp duty via the transfer duty concession QLD.

What is Transfer Duty in QLD?

paying transfer duty in Australia

Transfer duty is a tax you pay to the Queensland government when you buy a property. It can also be referred to as Stamp Duty (the two terms are used interchangeably and mean the same thing). Stamp duty is imposed and governed by the Duties Act 2001. This compliance tax applies to all dutiable transactions in the state of Queensland, such as:

  • a transfer of dutiable property.
  • an agreement for the transfer of dutiable property.
  • a partnership acquisition.
  • the creation or termination of a trust of dutiable property.
  • a trust acquisition or surrender.

Common Misconceptions About Transfer Duty

There are some common misconceptions about transfer duty in Queensland, particularly among first home buyers. The three most common misconceptions we generally hear are:

  1. “Stamp duty is a fixed rate”: A lot of people think that stamp duty is calculated based on a fixed percentage of the property’s purchase price. But in Queensland, it’s actually calculated using a sliding scale.
  2. “First home buyers don’t pay stamp duty”: There are some stamp duty exclusions and concessions for first home buyers in Queensland, but it’s not true to say, “all first home buyers are automatically exempt.” Eligibility criteria will still apply.
  3. “Transfer duty is covered by your mortgage”: Many first home buyers assume that stamp duty costs will be added on to the total cost of their home loan. While this is sometimes possible, it doesn’t happen automatically, and it will result in you paying more over the life of the loan.

Benefits of Understanding Transfer Duty

Stamp duty can have a big impact on your plans to buy a home, so it’s really important to correctly understand where it applies and how it is calculated. The three main benefits of understanding this include:

  1.   Better financial planning: An accurate understanding of stamp duty will make it easier for you to make well-informed financial decisions.
  2.   Find out how to avoid stamp duty: You may discover that you’re eligible for the transfer duty exemption in QLD for first home buyers. Even if you’re not eligible for a complete exemption, you may still qualify for concessional rates on stamp duty.
  3.   Easier cost management: Understanding stamp duty rates and how they apply will allow you to budget more effectively when planning a purchase that will be subject to stamp duty.

FAQ About Transfer Duty in QLD

  • Who pays stamp duty in QLD? The buyer of a property is generally responsible for paying stamp duty. This levy is based on the purchase price or market value of the property being purchased. 

Note: You pay transfer duty ONLY when you buy property. When you build, you are only paying this based on the value of the land, not on the house you build. This could mean thousands of dollars in savings.

  • How much stamp duty do I pay in QLD? In Queensland, the amount of stamp duty you pay depends on the purchase value of your property, and whether you are a first home buyer or buying an established property. This is also means-tested according to a person’s income and the number of dependent children they have. It can be as high as 5% of the purchase price (sometimes even higher!). For more detailed information, please talk to an experienced Sunshine Coast mortgage broker or visit the Office of State Revenue website.

When is transfer duty payable in QLD? This is payable in Queensland upon transfer of ownership of a property. It must be paid either within 30 days of settlement or within 30 days of the date the contract is entered into, whichever date is earlier.

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How to Avoid Transfer Duty: Transfer Duty Exemption in QLD for First Home Buyers

woman calculating transfer duty exemption

There is some stamp duty relief for first home buyers in Queensland. Concessional rates on transfer duty can apply under the First Home Concession, the Home Concession and the First Home Vacant Land Concession.

Non-Australians and non-permanent residents can also qualify for concessional rates on stamp duty, but they need to comply with additional foreign acquirer duty. For instance, where an Australian citizen has purchase costs of $14,916 on a $600K property, a non-citizen will have purchase costs of $56,914 on the same property. For more information on how to file a stamp duty concession QLD claim, we recommend that you seek professional advice from a mortgage broker on the Sunshine Coast.

Concessional Rates on Transfer Duty

To qualify for a stamp duty exemption or concessional rates, a first home buyer in Queensland would need to qualify and apply for one of the following concessions:  

1. Transfer duty exemption in QLD for first home buyers (First Home Concession)

This stamp duty exemption applies to Queensland homes valued under $550,000 and can potentially save first home buyers up to $15,925. To be eligible, you must:

  • have never claimed the first home vacant land concession.
  • have never held an interest in another residence anywhere in Australia or overseas.
  • be at least 18 years of age.
  • move into it with your personal belongings and live there daily within 1 year of settlement.
  • not dispose (sell, transfer, lease or otherwise grant exclusive possession) of all or part of the property before you move in.
  • pay market value if the residence is valued between $500,001 and $549,999.

2. Home Concession

You can claim the home concession for stamp duty even when you have acquired a home before. The concession rate applies to the first $350,000 of the value of the property, while the general rates apply to the balance. To be eligible, you must: 

  • Move into the property with your personal belongings and live there on a daily basis within 1 year of settlement.
  • Not dispose (sell, transfer, lease or otherwise grant exclusive possession) of all or part of the property before you move in.

3. First Home Vacant Land Concession

You could be entitled to a reduced rate of stamp duty if you buy vacant land valued under $400,000 and you intend to build your own home on it. This can easily save you up to $7,175 worth of stamp duty. To be eligible, you must: 

  • have never claimed the first home vacant land concession on another property.
  • have never held an interest in a residence anywhere in Australia or overseas.
  • be at least 18 years of age.
  • be paying market value if the vacant land is valued between $320,001 and $399,999.
  • build your first home on the land, move in with your personal belongings and live there daily within 2 years of settlement.
  • only build 1 home on the land.
  • be certain there is no building, or part of a building, on the land when you acquire it.
  • not dispose (sell, transfer, lease or otherwise grant exclusive possession) of all or part of the property before you move in.

How to Avoid Transfer Duty: Look for Cheaper Homes

couple looking at cheaper home options with realtor

Transfer duty is applied on a sliding scale — much like income tax. The cheaper your property, the lower your stamp duty rate will be, irrespective of the type of buyer you are. For example, in Queensland, you will not pay stamp duty if your property is valued under $5,000. While there aren’t too many properties available that cost less than $5,000, it illustrates the point that the lower your purchase price, the less stamp duty you’ll end up paying overall.

For more information, refer to the below table for a full disclosure of rates, taken from the Queensland Government website (note that these rates do not apply for those who are eligible for concessions and exemptions):

Property value Transfer duty rate
Not more than $5,000 Zero
More than $5,000 up to $75,000 1.5% per dollar over $50,000
$75,000 to $540,000 $1,050 plus 3.5% per dollar over $75,000
$540,000 to $1,000,000 $17,325 plus 4.5% per dollar over $540,000
More than $1,000,000 $38,025 plus 5.75% per dollar over $1,000,000

Need Help Avoiding Stamp Duty on a QLD Property? 

Wondering how to avoid transfer duty? Our experienced team of brokers can help. We’ll analyse your specific situation to see what concessions or exemptions you may be eligible for. Get in touch with us today to see how we can help reduce or eliminate your timestamp duty obligations.

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