If you are buying a property in NSW, check whether you will need to pay Stamp Duty, as this can be a sizeable fee to factor into your up-front costs.

Stamp duty is a tax payable to the state government when you buy certain assets, such as property. The amount you have to pay is calculated off the market value of the property. In NSW, it is referred to as “transfer duty”, and is payable to the Office of State Revenue.

If you bought a home in NSW for $600,000, for instance, your stamp duty would be $17,835. This amount is payable up-front within three months of settlement to avoid interest. The exception is residential units off the plan, where stamp duty needs to be paid within 15 months of the contracts being exchanged or completed.

You can calculate how much you’ll need to pay in stamp duty using the Office of State Revenue’s transfer duty calculator.

Stamp duty is an upfront cost that needs to be factored into your property purchase. While it cannot be added to your loan balance, you can use your deposit to pay it off. Just check whether this has any affect on your loan-to-value ratio (LVR) – having an LVR of less than 80% will usually incur Lenders Mortgage Insurance.

The good news is that if you are a first home buyer in NSW, you may be eligible for an exemption or concession. For properties purchased between 1 August 2020 and 31 July 2021, the First Home Buyers Assistance Scheme offers first home buyers in NSW a stamp duty exemption if they are purchasing an existing property valued up to $650,000 or a new property valued up to $800,000.

Concessions and exemptions are also available for properties above those values, vacant blocks of land, and certain property transfers (such as due to death or divorce).

The opinions expressed in this article are the opinions of the author(s) and not necessarily those of homeloans.com.au. The above is general commentary only and is not advice tailored to any individual's financial situation. We recommend seeking advice from a finance professional before implementing changes relating to your finances.