Following a large cash rate rise from the Reserve Bank of Australia on 7 June 2022, increasing mortgage repayments have quickly become a main concern of many homeowners. As the cash rate is forecast to continue rising into 2023, homeowners and buyers are facing rising financial pressure, leading many people to start looking at where they can remove or minimise unnecessary fees.
Stamp Duty Basics:
Stamp Duty (Land Transfer Duty) is a tax charged by the state government upon the purchase of property. The amount charged to the buyer depends on the contract price. This tax, which can amount to $55,000 on a property worth $1,000,000, is a significant cost to homebuyers, who are currently (June 2022) facing increasing mortgage repayments in conjunction with an inflationary economy.
The silver lining however is that with forecast house prices to fall 10-15%, the cost of stamp duty will decrease, increasing the affordability of property. First-home buyers will have additional options to take to further avoid this tax, coming in the form of the complete stamp duty exemptions or partial duty concessions, which are first home buyer schemes put in place by the state government.
First Home Owners – Saving With Stamp Duty Exemptions:
Whether a first home owner is fully or partially exempt from paying stamp duty depends on property price thresholds. An eligible buyer purchasing a property under $600,000 will be exempt from paying stamp duty, saving roughly $31,070, representing a very important saving for young first home buyers, reducing the upfront financial strain of saving up for a deposit on a house. For properties purchased between the price of $600,001 and $750,000, there will be a partial duty concession, which reduces as the price reaches the upper threshold.
Although surging house prices have caused the usefulness of this scheme to be reduced over 2020 and 2021, the forecast reduction in house prices will see more first home owners save on stamp duty costs, a vital financial buffer in the face of inflationary prices of goods and services.
Contact your mortgage broker for a more in depth conversation.