What is stamp duty and when do I pay it?

Stamp duty must be paid to the Victorian State Revenue Office during the settlement process (payment can't be delayed by up to a month, which used to be possible before the PEXA e-conveyancing system was introduced).

The amount of stamp duty payable is determined by various factors: the dutiable value of the property, the date the property was purchased, the purchase price of the property, the type of property and whether the purchaser is entitled to any discounts/concessions (because they are a first home buyer or pensioner). A handy stamp duty calculator can be found on the State Revenue Office website.

First home buyers can receive stamp duty discounts if they purchase a property up to $750,000 in value, provided they move into the property within twelve months of the settlement date, and then they live there for twelve months. There are some exceptions and qualifications to the definition of first home buyer, which are all listed on the State Revenue Office website.

Stamp duty does not usually apply to transfers of property ownership following a divorce/separation and inheritance, nor if there is a change of property ownership between spouses currently living in the property (and they must continue to live there for at least twelve months after the change of ownership date). Transfer of property ownership from parents to children outside of an inheritance will attract stamp duty, as will transfers between siblings, or spouses where it's an investment property.

If an incoming bank/lender is not covering the amount of stamp duty as part of the loan funds, the purchaser will need to ensure the required stamp duty funds are either sitting in the bank's nominated shortfall account by the morning of settlement day, or, if the bank doesn't have a shortfall authority (which tends to be the case with smaller and online lenders) that the stamp duty funds must have been deposited into the purchaser's lawyer's trust account, which links to the PEXA workspace during the settlement process. Note: the above is general information and should not be considered as legal advice.

Photo by Mikhail Nilov