What is Transfer Duty (Stamp Duty)?
Transfer duty, also known as stamp duty, is a state government tax imposed on certain transactions involving the transfer of ownership or property rights. While the terms “transfer duty” and “stamp duty” are often used interchangeably, they refer to the same tax levied on different types of transactions. The Queensland Revenue Office (QRO) is responsible for administering and collecting transfer duty in Queensland.
It is important to be aware of the types of transactions that may attract transfer duty in Queensland. This includes:
- Transfers of Property: When ownership of property, such as land or buildings, is transferred from one party to another, transfer duty is payable. This includes contracts to purchase a property, gifting your property to someone else, changing the ownership of the property (eg changing from individual names to a Trust for asset protection) or transferring just a part share of a property to another party.
- Leases and Assignments: Certain lease transactions, such as assignments of lease or surrenders, may attract transfer duty. The duty is generally calculated based on the consideration paid for the transfer of Lease.
- Mortgages and Debentures: The creation or assignment of a mortgage or debenture may also be subject to transfer duty. Generally, there will only be a concessional rate of duty charged on the transfer of a mortgage.
- Business Assets: Transfer duty may be applicable to certain transactions involving the sale or transfer of business assets. This includes the transfer of goodwill, licences, or intellectual property associated with a business.
Transfer Duty (Stamp Duty) Costs in Queensland
The amount of transfer duty payable is generally calculated based on either the value of the property or the type of transaction. The duty is typically calculated on the higher of the consideration paid or the unencumbered value of the property.
Examples of Calculation:
Say you purchase a house for $750,000. Since the purchase price of the house is $750,000, the dutiable value will also be $750,000.
Based on the current transfer rates, we can determine the transfer duty for the $750,000 house:
- For the first $5,000: Nil (no duty).
For the amount between $5,001 and $75,000: $1.50 for each $100, or part of $100, over $5,000.
- Transfer duty on $70,000 = $70,000 * 1.5 / 100 = $1,050.
For the amount between $75,001 and $540,000: $1,050 plus $3.50 for each $100, or part of $100, over $75,000.
- Transfer duty on $465,000 = $1,050 + ($465,000 * 3.5 / 100) = $16,275.
For the amount between $540,001 and $1,000,000: $17,325 plus $4.50 for each $100, or part of $100, over $540,000.
- Transfer duty on $210,000 = $17,325 + ($210,000 * 4.5 / 100) = $26,925.
Therefore, the total transfer duty for a $750,000 house in Queensland, based on the current rates, would be:
- $1,050 (for the $70,000 amount) + $16,275 (for the $465,000 amount) + $26,925 (for the $210,000 amount) = $44,250.
The most up to date version of the breakdown of transfer duty rates and thresholds can be found at: https://qro.qld.gov.au/duties/transfer-duty/calculate/rates/
*Updated as of June 2023
Commercial and Other Properties:
Transfer duty rates for commercial properties differ from residential properties and are generally higher due to the higher dutiable value of the property. The rates can vary depending on factors such as the value of the property and the purpose of the transaction.
It is recommended to consult with a legal professional or refer to the Queensland Revenue Office (QRO) for the most up-to-date transfer duty rates and thresholds applicable to commercial and other properties.
Impact of Additional Factors:
In addition to the value of the property and the type of transaction, other factors can also impact the transfer duty costs. These factors include:
Different rates and thresholds may apply depending on whether the property is classified as residential, commercial, rural, or vacant land. It is essential to understand the specific category in which your property falls to determine the accurate transfer duty rates.
Purpose of Transaction:
Certain transactions may be eligible for concessions or exemptions, reducing the amount of transfer duty payable. For example, concessions may be available for first-home buyers, transfer to spouse, matrimonial property transfers or transfer of trustees.
Transfer duty (Stamp duty) concessions and exemptions
First Home Concession:
The First Home Concession is designed to support first-time homebuyers in entering the property market. Eligible applicants may be entitled to a concession on the transfer duty payable on their first residential property. Here are some important points to consider:
- Eligibility: To be eligible for the First Home Concession, you must meet specific criteria, such as being a person (not a company or trust) and never having previously owned residential property in Australia.
- Property Value Threshold: The concession is applicable to properties with a dutiable value below a certain threshold. It’s important to check the current threshold as it may change over time.
- Concession Amount: The amount of the concession varies depending on the value of the property. Generally, the higher the value of the property, the lower the concession amount.
- Application Process: To claim the First Home Concession, certain documents and forms need to be lodged with the Queensland Revenue Office (QRO). It is advisable to seek legal advice or consult the QRO for the most up-to-date information and guidance on the application process.
The Home Concession is available to individuals who plan to occupy the property as their principal place of residence. Here are some key details about the Home Concession:
- Eligibility: The Home Concession is applicable to people who occupy the property as their principal place of residence within one year of the transfer and you are required to live in the property for one year.
- Property Value Threshold: Similar to other concessions, the Home Concession has a dutiable value threshold. It is important to check the current threshold, as it may change over time.
- Concession Amount: The amount of the concession varies based on the value of the property. The higher the value, the lower the concession amount.
- Application Process: To claim the Home Concession, certain documents and forms need to be lodged with the QRO. Seek legal advice or consult the QRO for the most up-to-date information on the application process.
Other Concessions for Specific Circumstances:
Queensland also provides additional concessions and exemptions for specific circumstances. These include, but are not limited to:
- Transfers Between Related Parties: Certain transfers between family members may be eligible for concessional rates of transfer duty.
- Matrimonial Property Transfers: Transfers of property between spouses or partners as a result of divorce, separation, or de facto relationship breakdown may attract concessional rates or exemptions if a formal matrimonial property agreement is entered into, noting that the transfer of property forms part of the Financial Agreement.
- Other Concessions: There may be concessions available for properties used for primary production, certain charitable purposes, or properties affected by natural disasters. It is crucial to consult the QRO or seek legal advice to determine eligibility for these concessions.
Additional Considerations and Factors Affecting Transfer Duty (Stamp Duty)
- Property Value and Transaction Type: The value of the property and the type of transaction can significantly affect the amount of transfer duty payable. Generally, higher-value properties attract higher duty amounts. It is important to accurately determine the value of the property and consider the type of transaction, such as a purchase, gift, or transfer as part of a deceased estate to someone that is not a beneficiary..
- Investment Properties and Rental Income: If you are purchasing an investment property with the intention of generating rental income, it is essential to consider the implications on transfer duty. In Queensland, transfer duty is generally calculated based on the higher of the consideration paid or the unencumbered value of the property. Rental income generated from an investment property can have taxation implications, which should be discussed with a qualified accountant or tax advisor.
- Eligibility Criteria and concessions: Queensland offers various concessions and exemptions for transfer duty. However, each concession has specific eligibility criteria and an application process that must be followed. It is crucial to understand the requirements and seek legal advice to ensure you meet the eligibility criteria and complete the application accurately.
- Additional Foreign Acquirers Duty (AFAD): In addition to transfer duty, foreign buyers may be subject to the Additional Foreign Acquirers Duty (AFAD) when acquiring residential property in Queensland. AFAD is an additional tax imposed on transactions involving foreign buyers and is payable in addition to transfer duty. The AFAD rates and thresholds vary depending on the property value and the residency status of the buyer.
Seeking Professional Advice for Transfer Duty (Stamp Duty) Matters
Here at Paramount Legal, our expertise and knowledge in property law and taxation can simplify the transfer of property for you. We provide individualised guidance based on your specific circumstances and can assist with compliance and documentation, negotiation and structuring transactions to minimise duty obligations, mitigating risks, as well as providing overall support throughout the process to ensure a smooth and legally compliant transfer of property.