Payment of Stamp Duty

The Duties Act 1997 provides that a liability for duty arises when a transfer of dutiable property occurs. If this is effected by a written instrument then liability arises when the instrument is first executed (s.12). The liability to pay stamp duty is that of the buyer, not the vendor.

In New South Wales residential conveyancing is conducted by way of the exchange of written contracts, with the completion of the contract and then transfer of property taking place approximately 6 weeks after. As such the liability to pay stamp duty arises when the contract comes into existence (the exchange of contracts).

Stamp duty must be paid within 3 months of the contract date to avoid interest being charged, unless the property is being purchased ‘off the plan’, which means the contract is conditional upon the construction of a dwelling before completion. For off the plan contracts stamp duty must be paid within 3 months of the earlier of completion of the contract, assignment of the contract or 12 months after the date of contract. Because most off the plan contracts take in excess of 12 months to be completed the effect of these provisions is that stamp duty is payable for ‘off the plan’ purchases 15 months after the exchange of contracts (12 months + 3 months).

On some occasions buyers are unable to pay the stamp duty before settlement. This will be the case where the buyer is obtaining a loan to finance the purchase and where the buyer’s personal contribution has been tied up on the exchange of contracts. In these circumstances settlement of the purchase will need to take place at stamp duty venue so that the cheque for payment of stamp duty can be obtained from the lending bank simultaneously with the settlement / completion of the purchase.

From time to time the State and Federal Government encourage various sectors of the property market by way of grants and stamp duty discounts/concessions. Examples of this include a $5,000.00 grant paid against liability for stamp duty for certain new homes or vacant land.

If you have questions about stamp duty or the purchase of a property get in touch with one of our property lawyers by contacting your nearest office. If you would like to obtain a no obligation quote then visit our conveyancing website by clicking here.

We have property and conveyancing lawyers located at Sydney, Parramatta, Sutherland and Wollongong.