Transaction & duties
Transaction costs and government duties are mandatory fees and taxes imposed on property transactions and ownership.
Transaction costs
Transaction costs are fees associated with buying and selling property. These include brokerage fees, agent commissions, legal fees, and other costs that occur during property transactions.
Stamp duty
Stamp duty is a one-time tax paid when purchasing a dutiable asset (land, cars, some licenses) unless exempt. It's calculated as a percentage of the purchase price or market value of the asset. The percentage varies by asset and by state, but it's generally in the 3 - 5% range.
Shares and units are generally exempt unless the entity owns significant land - in which case it is classed as transferring property. This is why even corporate title apartments still attract stamp duty.
Stamp Duty Rates (NSW Example)
| Property Value | Stamp Duty | Effective Rate |
|---|---|---|
| $500,000 | $17,990 | 3.6% |
| $750,000 | $29,240 | 3.9% |
| $1,000,000 | $40,490 | 4.0% |
| $1,500,000 | $67,490 | 4.5% |
Land Tax
Land tax is an annual tax on the combined unimproved value of all land you own. It's calculated by state governments and varies significantly between states. You can look up any property's land value on the NSW government portal.
Key points about land tax:
- Primary place of residence is exempt from land tax
- Calculated on the unimproved value of land (not the building)
- Paid annually by property owners
- Different rates and thresholds apply in each state
- For foreign owners and trusts there is a surcharge of 2% on the land tax called Super Land Tax. You can avoid this in trusts by making an irrevocable term in the deed to exclude all foreign persons from being beneficiaries.
- The tax free threshold is only available to individuals, companies and trusts pay the full rate.
In NSW, jointly owned land is assessed once as a single ownership (one tax-free threshold). Each owner is then assessed on all land they hold, both joint and sole. You receive a credit for tax already paid on the joint assessment, but the credit is not refundable — so if you only own land jointly you may effectively lose part of a second threshold.
The above reasons are why property is not an investment you find in an index fund where 3.6% of the value is paid in land tax each year. It's more economical to invest in it personally.
Buy property in multiple people's names to take advantage of multiple thresholds. Each person gets their own land tax threshold.
Buy in multiple states to access multiple thresholds.
Land Tax Rates by State (2024)
| State | Threshold | Rate |
|---|---|---|
| New South Wales | $1,075,000 | $100 + 1.6% |
| Victoria | $300,000 | $275 + 0.5% |
| Queensland | $1,000,000 | $500 + 1.7% |
| South Australia | $500,000 | $0 + 0.5% |
| Western Australia | $300,000 | $300 + 0.25% |
FAQ
Sometimes. In NSW, individual owners can each access their own land tax threshold on land they own separately, but jointly owned land only gets one threshold for that ownership. The principal place of residence exemption is a separate exemption for an eligible home.
Yes, stamp duty applies to all property purchases regardless of whether it's your home or an investment property. Stamp duty does form part of the cost base for capital gains tax purposes.
Land tax on investment properties is generally deductible as a holding cost. There is generally no land tax on an eligible own home because the principal place of residence is exempt.
Land tax rates and thresholds are reviewed annually by state governments. Changes are typically announced in state budgets and apply from the following financial year.