I was recently reading an article about stamp duty that I thought perfectly outlined how crazy stamp duty has become. The first paragraph summed it up perfectly –
“In 1986, a family purchasing a house valued at the median Sydney price would have paid about $2,000 in stamp duty. Today, that family would need to pay more than $41,000 in stamp duty for the same median-priced house. If stamp duty had simply kept pace with inflation, that payment would be about $6,000.” – Stephen Cartwright, NSW Business Chamber
Your stamp duty is worked out based on the property purchase price, where the property is located and the type of purchase made. For example if you are a first homeowner you have a concessional rate.
However the article demonstrates that we’re all paying much more than we really need to be and that there are other – better – solutions for the State governments to raise funds.
This article is not the first I’ve read on the subject – and it likely not the last! A few months ago I was reading about the Housing Institute of Australia’s (HIA) position, which is that stamp duty cause a vicious cycle. In their Summer 2015 edition of Stamp Duty Watch. A press release they put out at the same time stated that –
“The cost of stamp duty is equivalent to almost four months’ worth of earnings, with stamp duty causing mortgage repayments to increase by $1,165 per year, or $34,955 over a 30- year loan term.” – HIA Australia
Many homebuyers have to use much of their deposit to pay for stamp duty, which then results in them having to borrow more – resulting in more interest paid out over the term of the loan. You can see how things snowball …
So my advice to all property buyers is to ensure you always factor stamp duty into your budgeting.
If you would like some help working out your stamp duty figures, please contact me.
Guest blog by Fiona Eastwood from Impero Conveyancing