Stamp Duty (Transfer Duty)

Definition

Stamp duty (officially 'transfer duty' in most states) is a state/territory government tax charged on the purchase of real property. Rates vary by state, are typically progressive (higher rates on higher values), and range from approximately 1.25% to 5.5%. First-home buyers may qualify for concessions or exemptions. Stamp duty is a one-off cost at settlement and is included in the CGT cost base of investment properties.

Stamp duty is often the single largest upfront cost of buying property — easily $20,000–$60,000 on a median-priced home. For investors, it's crucial to include stamp duty in the cost base to reduce future CGT. Some states now offer land tax alternatives (e.g., NSW Choice) to replace the upfront hit with annual payments.

You buy an investment property in Victoria for $650,000. Stamp duty is approximately $35,000. This is added to your cost base, reducing your future capital gain by $35,000.

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