Stamp duty in the Australian Capital Territory

Canberra, Australian Capital Territory. Picture: Getty

Stamp duty, or conveyance duty, is a significant cost homebuyers must consider when purchasing property in the Australian Capital Territory. Imposed by the ACT Government, the levy is calculated on the property's purchase price. There are some instances when you might be eligible for a total exemption, or a partial concession to help with the cost of stamp duty. Understanding the nuances of stamp duty in the ACT, how much you’re required to pay and when is an important first step before house hunting begins.

What is stamp duty about?

Put simply, stamp duty is a tax levied on property transactions by the Territory. The duty got its name when official documents were literally rubber-stamped to show that the property tax had been paid. Today, the fee earns the ACT approximately $250 billion in annual revenue, funding a long list of essential public services. The tax applies to most property transactions, including residential, commercial and even vacant land and must be paid within 90 days of the settlement date.

How is stamp duty calculated in the ACT?

The stamp duty you will pay depends on several factors, including the property's value, the type of property you’re buying, and whether you're eligible for any concessions or exemptions. Since stamp duty calculation in the ACT is progressive, the percentage of stamp duty payable increases as the property price increases. 

Here’s a simplified breakdown of how the duty in the Australian Capital Territory is calculated:

Example case study

After house hunting in Canberra, Sarah and Hamish have decided to buy an established home priced at $850,000. Because Sarah sold her previous home just two years ago, the couple do not qualify for any exemptions or concessions and therefore must pay the duty in full. After consulting a stamp duty calculator they will need to pay $25,654 in duty, $463 as a transfer fee and approximately $172 for the mortgage registration fee, bringing the total to $26,289.

Stamp duty exemptions and concessions in the ACT

The recently updated Home Buyer Concession Scheme in the Territory offers eligible buyers a complete stamp duty exemption for property purchases up to $1 million, saving residents as much as $34,000 in tax when buying their home. It applies to vacant residential land and both new and established homes, anywhere in the ACT. The standard duty rate applies for property priced above $1 million.

To take up the scheme, home buyers must not earn more than $250,000 a year as a household and cannot have owned a property in the previous five years prior to purchasing in the ACT. How many children you have as dependents also increase the income threshold required. People fleeing family violence can have owned a property in the previous five years.

To encourage downsizing, pensioners will receive a full stamp duty concession on the first $1 million of property value when relocating, and get a partial concession for homes priced over $1 million.

Budgeting for stamp duty

Unless you qualify for an exemption, stamp duty is an unavoidable cost of buying a home. And at no small sum, it’s crucial to budget for it early on in your property search so you’re not caught out when you can lest afford it.

Use an online calculator specific to the ACT so you have an accurate estimate of how much you’ll need to pay. Once you know the amount, factor it into your deposit, this way you won’t be borrowing to pay the bills. Ands finally, speak to a professional such as a conveyancer, solicitor or mortgage broker to provide you with detailed advice tailored to your situation.