If you’re looking to buy a property in the Northern Territory, you’ve probably heard people talk about stamp duty, also known as transfer duty. But what is it, and does it apply to you?
Simply put, stamp duty is a tax we pay when buying a house. The NT Government charge a percentage of the price of the property you’re buying. On average, people in the NT pay tens of thousands of dollars in stamp duty. That’s on top of the mortgage, deposit and other expenses that come when buying a property.
How much does stamp duty cost?
The exact price of stamp duty is determined by each state government. In the NT, there are four different price brackets that determine your stamp duty. For all properties under $525,000, there is a formula used to determine your stamp duty. For properties over $525,000, you’ll just pay a percentage of the property’s value.
See the table below to get an idea of how much you will pay.
|Property value||Stamp duty payable|
|Up to $525,000||(0.06571441 x V) + 15V, where V is 0.1% of the property’s value|
|$525,001 to $3,000,000||4.95% of the property value|
|$3,000,0001 to $5,000,000||5.75% of the property value|
|More than $5,000,000||5.95% of the property value|
Find out your stamp duty cost with our free Stamp Duty Calculator NT
When do I have to pay stamp duty?
In the Northern Territory, you have to pay stamp duty within 60 days of settlement. This means that you need to make sure you budget for stamp duty on top of your deposit, mortgage, building inspection, moving costs and other expenses. Unfortunately, stamp duty needs to be paid up front and can’t be paid periodically as a part of your mortgage.
Are you entitled to any stamp duty concessions?
Now for some good news! Before you have to hand over potentially tens of thousands of dollars in tax, you might qualify for a stamp duty exemption. First time home buyers can apply for a $10,000 bonus under the Northern Territory’s First Home Owner Grant (FHOG). Similarly, pensioners may also be entitled $10,000 off their stamp duty under the senior, pensioner and carer concession. More information about grants and discounts can be found on the Northern Territory government website. We recommend always checking to see if you qualify for a stamp duty concession.
Calculate your stamp duty now with our free Stamp Duty Calculator
The issues with stamp duty
For many years people have raised their concerns with stamp duty. It may earn the government a considerable amount of money, but it’s had a real impact on everyday Australians. Critics of stamp duty have pointed out that it’s outdated, it comes at a financially difficult time and it also ends up changing our behaviour for the worse.
An out-dated tax
The original tax for stamp duty comes from an old system of government. Land transfers were less common and property wasn’t logged to the level of detail that it is today. Plus, the actual process to officiate a sale and stamp (yes, a real stamp) the documents took more government time. Stamp duty was therefore an imperfect way to make sure the government was getting taxes from property owners, but things have changed a lot since then. Not only is the process much easier for governments, but there are now accurate and up-to-date records of every piece of land in the Northern Territory. The way we buy and sell property has changed, and so the question is – shouldn’t the taxes that come with it change too?
The cost of stamp duty
Easily one of the most significant purchases the average Australian makes is buying property. It’s an exciting dream that many of us pursue. But at the same time, it’s a high financial bar to get over. Property prices in the NT have soared upwards over the past few decades and are now vastly higher than the average income. Which means that stamp duty is not only a high tax, but it comes when the difference between the average wage and the average price of property is wider than ever.
Perhaps most importantly, the cost of stamp duty can also lead to some behaviour changes. The added cost is a big barrier to anyone trying to enter the real estate market. But not only this, it’s a big deterrent on anyone who’s looking to move to a new house. A growing family may choose to stay and try to renovate or expand their current house just to avoid paying stamp duty again. So too, retirees often stay in houses that aren’t ideal for their needs simply because downsizing will cost them a lot in tax.
The future of stamp duty
Many will be glad to hear that reform is on the horizon. The Australian Capital Territory is currently leading the way to phase out stamp duty. In 2012, the ACT government released a 20-year plan to reform the territory’s property tax, an intention they said aimed to “abolish a number of inefficient and unfair taxes”. Instead, they are replacing it with “barrier free conveyancing”.
At the end of 2020, the New South Wales treasurer, Dominic Perrottet, proposed his own plan for tax reform, with the intention “to help the people of NSW achieve the Australian dream of home ownership.” His solution replaces the upfront cost of stamp duty with a much smaller annual property tax. While the change hasn’t been officially approved yet, many are hopeful that the ideas for reform will lead to change. Ultimately, the future of stamp duty in the Northern Territory is in the hands of the NT government.
Stamp duty calculator
If you’re buying a house and want to get a quick idea of stamp duty fees, use our free and easy stamp duty calculator also known as a transfer duty calculator.
While keeping on top of your outgoing costs, why not also calculate your conveyancing fees. Our Conveyancing Costs Calculator will provide an estimate in just a few minutes. Calculate your costs now!