Most first-home buyers budget hard for the deposit, then get blindsided by the next cost: stamp duty. It is a state tax on property transfers, and after your deposit it is often the largest single buying cost. You generally cannot add it to your loan, so it is cash you need on top of everything else.
What it is and who charges it
Stamp duty, also called transfer duty or land transfer duty, is charged by each state and territory. The federal government does not set it. That is why the rules and amounts differ depending on where you buy. It is paid by the buyer, and it is due around settlement. The revenue office in your state is the source of truth for the current rates and thresholds.
How it is calculated
Duty is worked out on the property's price, or its market value if that is higher. It runs on a sliding scale: the more expensive the property, the more duty you pay, and the rate steps up through brackets. A small difference in price near a bracket can move the duty more than you would expect. Because it scales with price, duty on a higher-priced home can become a large cash cost.
The cash-flow trap
Here is the part that catches people. Lenders may finance your property. Stamp duty generally comes out of your own pocket, near settlement, on top of the deposit, legal fees, and inspections. If you save for the deposit and forget the duty, you can find yourself short at the worst possible moment. Build it into your savings target from day one.
Where the concessions are
Every state and territory offers some relief for first-home buyers, and sometimes for new builds or off-the-plan purchases. These can be full exemptions below a certain price, partial concessions on a sliding scale above that, or different treatment for a brand-new home versus an established one. The thresholds and rules change regularly, and they vary a lot between states, so the only reliable figure is the one on your own state revenue office's calculator for your price and situation.
A few other things shift the number:
- Off-the-plan and new builds can be treated differently from established homes in some states.
- Foreign buyers usually pay an additional surcharge.
- Some states have introduced or trialled an annual property tax as an alternative to the upfront lump sum, another reason to check what currently applies where you are buying.
Before you make an offer
Run your exact purchase price through your state revenue office's stamp duty calculator before you commit to anything. Check whether a first-home concession applies, and whether buying new rather than established changes the figure. It is a large, unavoidable cost, but it is also a knowable one. There is no reason to be surprised by it at settlement.