Deciding to enter the property market and purchase a property is a big decision and one that does carry with it quite a few upfront costs. One of these costs that is often overlooked by buyers is transfer duty, which is a taxed imposed by the Queensland Government on the transfer of property.
When purchasing a property in Queensland you are required to pay transfer duty to the Office of State Revenue as part of the conveyancing process. As a Buyer you become liable for the payment of transfer duty upon entering into a contract of sale for ‘real’ property.
The amount that a buyer becomes liable for depends on the value of the property they are purchasing. Transfer duty is calculated on the price of the property as it appears on the contract of sale. Therefore when buying a property the amount of transfer duty you will be required to pay will vary according to the price of the property you decide to purchase.
As an example on a property worth $300,000.00 the transfer duty payable is $8,925.00, while on a property worth $600,000.00 the transfer duty payable is $20,025.00.
You can get an estimate of the amount of transfer duty you will be required to pay on a property by visiting the website of the Office of State Revenue and using the publicly available calculator.
As you can see the amount payable for transfer duty can be significant and it is a compulsory tax imposed by the Queensland Government. There are concessions available on transfer duty for various things, such as the property being your first home, or your principal place of residence. The amounts shown above are the full rates of transfer duty payable with no concession applied, such as when you purchase a property purely for investment purposes.
However you may be eligible for a concession on the amount of transfer duty payable if you meet the requirements for one of the concessions available.
The main transfer duty concessions available in Queensland are:
- Home concession: This concession applies if you intend to occupy the property as your principal place of residence following settlement and reside there for the required amount of time.
- First home concession: This concession applies if you are purchasing your first property and intend to occupy it as your principal place of residence following settlement and reside there for the required amount of time.
- First home vacant land concession: This concession applies if you are purchasing a block of land where you intend to build your first home.
Applying the home concession, for instance, to a property worth $300,000.00 the transfer duty payable is $3,000.00, while on a property worth $600,000.00 the transfer duty payable is $12,850.00. As you can see these concessions can save you a large amount of money, so it is worth talking to your conveyancing solicitor about these concessions and whether they apply to you.
Transfer duty must be paid prior to the settlement of the property and your solicitor will usually ask you for the amount you are liable for a week before settlement is due.
Transfer duty was previously known as stamp duty, as the transfer document and the contract of sale are ‘stamped’ as part of the assessment of your liability for transfer duty. If you are taking out a mortgage on the property, your lender will require stamped transfer documents to be presented to it at settlement in order to complete the transaction.
If you are selling a property it is also important that you are aware of stamp duty as you may also become liable for its payment. This can occur where the buyer fails to pay the transfer duty, as in Queensland both parties to a transaction are liable for its payment, but the buyer is required to pay it in the first instance. If they fail to do this though the Queensland Government can request payment from the seller and can also bring legal proceedings against both parties for its payment.
Transfer duty becomes payable 30 days from the date of the contract of sale, or 30 days from the contract becoming unconditional, such as the pest & building and finance conditions being satisfied.
Whilst most commonly applied to the purchase of a property, transfer duty also applies to other transactions affecting ‘real’ property, such as giving a half-share of a property you own to a family member, or providing access across your property by way of an easement, or creating a trust over your land for your children or other family members. In these cases the transfer duty payable will be calculated on the unencumbered value of the land, which means the value of the property being transferred disregarding any encumbrance, such as the money owed under a mortgage.