By Barbara Messer, ninemsn Money
Jessica Lim owns several investment properties in Queensland, but resides in Sydney.
"The main reason my husband and I invested in Queensland four years ago is because at the time there was more money being invested in new property developments and infrastructure," Lim says. "I can't say lower stamp duty was the main reason we invested in Queensland, but it was an added incentive."
Historically, Queensland has charged the lowest stamp duty of any state government, but David Hamilton, national chairman of First National Real Estate, says lower stamp duty doesn't necessarily tempt buyers to purchase in Queensland over other states.
"Queensland has always had very low stamp duty, which used to work in our favour in terms of cross-border purchases. It has attracted some buyers across the border from Tweed Heads [in NSW], but as prices in Tweed Heads have dropped, buyers have stayed put," Hamilton says.
The trouble with avoiding stamp duty is that rates fluctuate considerably depending on which state you live in, whether you're a first home buyer, and whether you're buying an existing home, an off-the-plan or brand-new home, or vacant land.
First home buyers in NSW, Queensland and Western Australia currently pay zero stamp duty on a property worth $500,000, whereas a first home buyer in Victoria would fork out $21,970 on stamp duty for a property of the same price.
This might trigger an exodus of buyers from Victoria were it not for the fact that the Victorian government offers concessions of its own. This includes a 1 percent reduction for properties valued under $440,000 or a discount of $3100 for properties valued between $440,000 and $550,000 but only if you're buying the property as your principal place of residence.
Confusing, isn't it?
Stamp duty is simply a tax charged by state governments on the transfer of property. Generally the more the property is worth, the more stamp duty you'll pay.
The easiest way of comparing rates and concessions is via the revenue office in each state, or by using an online mortgage calculator. State governments tend to revise their stamp duty rates at budget time, so make sure you're accessing the most up-to-date data.
Many first home buyers in NSW, Queensland and Western Australia are rushing to snap up properties under $500,000 to save tens of thousands of dollars on stamp duty.
But GoodyerDonnelley principal Debbie Donnelley warns buyers not to get their hearts set on paying zero stamp duty, because properties in this price bracket are now incredibly competitive.
"One thing first home buyers forget is that stamp duty in NSW is incremental over $500,000 so while they might be spending a little bit more if they buy a property above that threshold, they will receive more for what is really a small 'penalty'," Donnelley says.
"There are fewer and fewer homes available priced below $500,000, which means there is a lot of competition among first home buyers and young families for prices in that range, so it makes sense to broaden your scope."
In 2008, Bankwest published the Residential Stamp Duty Report, which found stamp duty had soared on the typical Australian home by 59 percent in five years, raising $53 billion in revenue for state and territory governments.
On the upside, stamp duty is used to pay for useful things like education, health, law and order and public safety. It's expensive and tedious, but unfortunately it's here to stay.
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