We all know stamp duty plays a major role when purchasing your first property. So what is it? In a nutshell, stamp duty (or transfer duty) is a government tax that is required to be paid when buying a property.
First homebuyers in Western Australia are fortunate enough not to have to pay stamp duty on properties that are valued under $430,000. As of July 2014, if the home they purchase is over $430,000 but under $530,000, first homebuyers pay a concessionary rate of approximately $19 for every $100 over that sale price. For example, if the sale price for a property in Perth was $431,000 (i.e. $1,000 over the threshold of $430,000), then the new home owner would pay around $190 in stamp duty, or tax.
First time homebuyers are also exempt from stamp duty when buying vacant land, so long as the purchase is less than $300,000. In the case that it’s over $300,000, they pay around $13 for every $100 over that price, up to the value of $400,000.
To receive these concessionary rates of stamp duty, a first homebuyer must first prove their eligibility for pre-approval.
To be eligible they must:
- Be eligible to qualify for a First Home Owners’ Grant;
- Have a contract to buy a new, established or off-the-plan house, or have a contract to build;
- Use the property as their primary residence (i.e. not use it for business or investment purposes);
- Be over 18 years of age;
- Be an Australian citizen or permanent resident.
If you would like to work out exactly how much stamp duty you’ll be paying on your first property, refer to the Stamp Duty Calculator.
In addition to the perks of waived or discounted stamp duty, first homebuyers also enjoy the added bonus of being eligible for the best First Home Owners’ Grant rate ever seen in the State. As of January 2017, the Grant increased in Western Australia from $10,000 to $15,000, with the rate being fixed in place for twelve months. The increase was put in place to help first homebuyers struggling to get a foothold in the property market, and to stimulate the State’s housing construction sector.
For more detailed information on the benefits of purchasing your first home and all the associated exemptions, contact one of the team at ACTON today on 9386 1808.