Taxes can be awfully confusing at the best of times, but when it comes to the buying and selling of property it seems to be impossible! That’s where H & H come in, to help you understand taxes in the simplest way possible. To avoid confusion between buying and selling, we will be addressing these topics separately. So, let’s dive right into property taxes and buying property in Queensland!
Stamp Duty (Transfer Duty)
Stamp duty, also called transfer duty, is one of the most common taxes you pay when purchasing a property. It refers to the transfer of dutiable property which could include a house, a car, land, insurance, or a corporation.
The buyer is the person responsible for paying the stamp duty. You’ll usually pay more stamp duty if the property is more expensive. In Queensland, there is a 30-day window in which stamp duty must be paid. You can usually pay online via credit/debit card or via bank transfer.
So how much is stamp duty?
Stamp duty is decided by the states and territories rather than the federal government. Therefore, every state works it out differently making it difficult for you to work out with pen and paper. Relevant concessions and exemptions should also be considered. For example, each state has reductions in stamp duty for first home buyers. In Queensland, first home buyers can expect drastically reduced stamp duty on purchases under $500,000.
The best way to get an idea of how much stamp duty you’ll owe is by using a handy online calculator such as this one offered by realestate.com.au.
This one, unfortunately, isn’t a one-off payment. Calculated at midnight on June 30, land tax needs to be paid by the owner annually. Your tax rate will all depend on what type of owner you are, the total value of the land, and whether you qualify for any exemptions.
Land tax applies to anyone who owns freehold land including vacant land, land that is built on, lots in building unit plans, lots in group title plans, lots in a timeshare scheme, and lots owned by a home unit company. If you share the ownership of your land with other people, you will be taxed based on your share.
The seller is responsible for land tax until the sale is settled unless the buyer takes possession of the land prior to settlement, in which case they are liable for land tax.
Only brand new houses in Australia incur any GST. If you are purchasing ‘second-hand property’ or residential property that has been lived in, you won’t be liable for GST. Whether you are purchasing for investment or to live in, if it’s not brand new, you will be GST exempt.
Buying For Investment
If you plan on turning your purchase into a rental property, there are tax considerations to think about.
For example, there are tax deductions you will be able to claim such as property management fees, council and water rates, advertising for tenants, insurance, interest on loans, and depreciation of white goods such as fridges, air conditioners, and washing machines.
However, there are some limits on what you can claim on taxes. For example, you can not claim expenses for personal use of the property, utilities paid by the tenant, or costs related to the initial purchase of the property.
This is handy information to keep in mind when June 30 rolls around. Make sure you’re keeping copies of documents proving your expenses from the get-go.