Do You Pay Transfer Duty When Purchasing or Selling Property in NSW?

Thinking about buying or selling a property in New South Wales (NSW)? One of the key costs to be aware of is transfer duty (also known as stamp duty). If you’re a first-time buyer, an investor, or selling a property, knowing who pays what can help you budget wisely and avoid any surprises.

In this post, we’ll simplify transfer duty, who needs to pay it, how much it costs, and whether sellers have to worry about it when selling a property in NSW.

What Is Transfer Duty?

Transfer duty, often referred to as stamp duty, is a tax imposed by the NSW government when property ownership is transferred. It applies to various types of property, including:

• Residential homes
• Holiday homes
• Vacant land
• Farming properties
• Investment properties
• Commercial properties
• Business assets that include property

Each Australian state has its own rules and rates for transfer duty, so it’s important to check the specific requirements if you’re buying property in a different state. 

In NSW, the duty is calculated based on the property’s purchase price or market value, whichever is higher.

Who Pays Transfer Duty?

In NSW, the buyer is responsible for paying transfer duty. This tax is payable when a property is purchased and the transaction is formalised. The seller does not pay transfer duty when selling a property.

Buyers must pay the transfer duty within three months of signing the contract for sale or on settlement (whichever is earlier), except for off-the-plan purchases where certain conditions may extend the payment deadline.

It’s important to note that transfer duty rules vary across Australia. Each state and territory has its rates, exemptions, and deadlines. If you’re buying property outside of NSW, be sure to check the specific transfer duty requirements for that state. 

For example, Victoria has different thresholds for concessions, while Queensland offers first-home buyer exemptions under certain conditions. Understanding these differences can help you plan your purchase more effectively and avoid any unexpected costs.

How Much Is Transfer Duty in NSW?

The amount of transfer duty payable depends on the property’s purchase price. 

Below is a general breakdown of NSW’s standard transfer duty rates:

Image source: Revenue NSW

Transfer Duty Concessions and Exemptions

NSW offers several concessions and exemptions to eligible buyers, including:

• First Home Buyer Assistance Scheme: Eligible first-home buyers may receive a full or partial exemption on transfer duty for properties valued up to a certain threshold. This can significantly reduce upfront costs and make homeownership more accessible.
• Off-the-Plan Purchases: If you buy an off-the-plan property as your principal place of residence, you may be eligible for a deferral of transfer duty payment. This allows you to delay payment until the property is completed or a specified period has passed (up to an additional 12 months), which can help with cash flow.
• Deceased Estates and Transfers Between Family Members: Some transactions, such as transferring a property between spouses, as part of a deceased estate, or due to inheritance, may be exempt from the transfer duty. However, eligibility criteria and documentation requirements must be met.
• Exemptions for Certain Transactions: Transfers that occur due to divorce or relationship breakdowns may also be exempt from transfer duty under specific conditions.
• Small Business Relief: In some cases, small businesses purchasing commercial property may be eligible for reduced transfer duty rates or exemptions.

Each exemption or concession has specific eligibility requirements; buyers should check with Revenue NSW to determine if they qualify.

Does the Seller Pay Transfer Duty?

No, sellers in NSW do not pay transfer duty when selling a property. However, they may have other financial obligations, such as:

• Capital Gains Tax (CGT): If the property being sold is not the seller’s principal place of residence, they may need to pay CGT on any profit made from the sale.
• Real Estate Agent Fees: Sellers typically pay their real estate agent commission fees.
• Legal and Conveyancing Fees: These are costs associated with preparing contracts, conducting searches, and handling the sale’s legal aspects.

How to Calculate and Pay Transfer Duty

Buyers can calculate their estimated transfer duty using the NSW Revenue’s online calculator. 

To pay, buyers need to:

1. Obtain an assessment notice from Revenue NSW.
2. Pay the duty within the specified timeframe (usually three months from the contract date).
3. Ensure payment is made before the property transfer is registered with NSW Land Registry Services.

Your conveyancer will help with this!

Paying Transfer Duty in Nsw

While buyers are responsible for transfer duty in NSW, sellers should also know their financial obligations, such as capital gains tax and agent fees. Understanding transfer duty can help both buyers and sellers make informed financial decisions and avoid surprises during the transaction process.

If you’re planning to buy or sell a property in NSW and need expert advice, our team is here to help. Get in touch today to ensure a smooth and stress-free property transaction!

Not in NSW? 

No worries! Below, you’ll find relevant links to transfer duty in other Australian States and Territories:

Queensland

Victoria

Tasmania

ACT

South Australia

Western Australia

Northern Territory