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Study Says: Australia's Stamp Duty is the World's Fourth-Highest Property Tax

Announcement posted by Purely Finance 03 Oct 2013

Mortgage brokers and financial planners in Perth reveal little-known strategies for minimising the stamp duty's impact on homeowners.
Perth, WA, October 3, 2013 - A recent study by an accounting company, UHY Haines Norton, showed that Australia's stamp duty tax is the fourth-highest property tax in the world, behind only India, Spain and Britain. In addition, Australia's average stamp duty is more than three times higher than the US or Canada.

In Western Australia, a property sold in WA for $382,000 would be taxed at a rate of 3.18%, compared to the average Australian rate of 3.2%. If the home sold for $545,000, the rate would increase to 3.65% in WA compared to a 3.7% average in Australia. A home selling for $3.82 million in WA would produce a 4.9% windfall for the WA government, compared to the 5.3% Australian average.

These tax levels allowed state governments in Australia to amass a total of more than $1.2 billion in taxes for the financial year beginning in 2011 and ending in 2012.

Below-average Taxes; Above-average Deals

Queensland has become a tax haven for those looking to relocate, because their stamp duty tax can be as little as a third of the average tax. In addition, they offer some discounts to first home buyers. In the current era, Queensland has become an attractive area for those who can find jobs there.

Perth and WA offer a pleasant situation for first home buyers, as all of the stamp duty tax is forgiven up to $500,000. From $500,000 to $600,000, tax is collected at a rate of 22.51% of the value over $500,000. This effectively ends the discount as one gets closer to $600,000. Since most first home buyers are working on a budget, the rate between $500,000 and $600,000 seldom comes into play.

Other Discounts

Many buyers who aren't first home buyers are looking at having new homes built. If one buys the land and then builds, only the price of the land itself is subject to stamp duty. This allows someone having a new home built to avoid paying tax on the building and creates a de facto discount for new home buyers.

How to Minimise Tax Impact

While the author of the UHY study, Dario Nazzari, feels that high taxes can act as a barrier to market entry for many, it is still possible for Australians to purchase a property if they are careful with their finances. According to Richard Ezzard, Director of Purely Finance, “Australians are among the most highly-taxed in the world but we have a much better economy than many places, too. For those who are on the fence about buying a home, we would like to offer the opinion that it is more possible and more plausible than you may think.”

Ezzard continued, “In these competitive economic times, it is important that you conduct your finances like a business. That means paying attention to the fundamentals, such as minimising your buying price and maximising your selling price. When taking out a home loan, business loan or investment loan in the Perth area, always negotiate for the best rates, the best terms and the lowest fees.”

Ezzard concluded, “Ultimately, the best way to take care of your finances is to consult our mortgage brokers and financial planners when purchasing properties in the Perth market. It pays to have someone watching your back.”

Purely Finance is an independent firm of mortgage brokers and financial planners serving Perth and suburbs. For more information about minimising your tax impact, call (08) 9472 9766 or visit their website: http://www.purelyfinance.com.au/.