What kind of taxes & duties come with buying a property?

When buying a property, you may encounter various expenses such as transfer duty (commonly known as stamp duty), land tax & council rates.

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If you're classified as a foreign resident for property tax purposes, you may also be subject to surcharge purchaser duty and a foreign investment fee. You will NOT be considered a foreign resident if you hold a permanent residence or partner visa (subclass 309 or 820). Specific information on property purchase for foreign residents is explained in Can foreign residents buy a property in Australia?

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Transfer duty (Stamp duty)

Stamp duty generally applies to any kind of property purchase, including investment properties, farms, gifted properties, property distribution by trust, etc. Transfer duty is calculated based on the property’s sale price or its current market value.You must pay transfer duty within 3 months of signing a contract for sale or transfer. If you buy a home off the plan, you may have up to an additional 12 months to pay your transfer duty.Here are the brackets for the stamp duty rate from 1 July 2023.

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Council rates

Council rates are fees levied by local governments on property owners to fund public services. The amount charged is based on the valuation of the property and is typically paid annually or in instalments throughout the year.‍

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Land tax

Land tax is an annual tax levied at the end of the calendar year on land value you own that is above the land tax threshold. Land tax applies regardless of whether income is earned from the land. The government will provide land value via your NOA (notice of assessment). Generally, you do not pay land tax on:

• your home, known as your principal place of residence
• your farm, known as primary production land
• any land you own with total taxable value below the land tax threshold.

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Land tax threshold

 *The threshold is for the total value of all your taxable land, not on each individual property.

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Land tax is calculated by the following formulas:

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For Land lower than premium threshold: $100 + (land value-  general threshold) x 1.6%

For land above premium threshold:  $88,036 + Remaining value above the premium threshold x 2%

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Let’s calculate the land tax for the following scenario!

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You bought an investment property in Wollongong. Your property value was $1,000,000; composed of $450,000 house value and $550,000 land value. Wollongong City Council has charged you a $5,000 council rate (estimate).

Stamp duty: $39,735 ($10,530 + $4.5 x [($1,000,000 - $351,000) / 100])

Council rate: $5,000

Land tax: $0 (land value $550,000 is under threshold)

Therefore, your total property expense for 2024FY will be $44,735. 

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CTK Accounting is a full-scope accounting firm based in Wollongong, servicing clients nationally.

For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au

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