Transfer Duty Explained


Transfer duty – paid when anyone buys a property – was, until recently, known as ‘stamp duty’ in New South Wales. And it’s come a long way from its 17th century origins as a fee for officials to process a land sale in Italy with an actual stamp. Everything was done manually, and written down by hand.

Not now. 

And yet people in Sydney still pay a hefty transfer duty whenever they purchase property. So why does this 350-year-old charge remain when we no longer use a rotary-dial phone or warm our houses with briquettes (look it up kids)? Is it just a government cash grab, or is there something else going on?

After a 20% deposit, transfer duty is the next-biggest amount you need to pay to buy a home. So what is transfer duty, and what can you do about it?

Two parties shaking hands after buying/selling a house

Why is there a transfer duty?

Governments need money to run things. The federal government collects taxes and gives some of the revenue to New South Wales. The state government also collects money, and transfer duty is one of the big ones. 

State and territory governments across this wide brown land love these payments. It’s a simple and accepted revenue stream that contributes to the amount they can spend on services, such as roads, public transport, hospitals, schools and a whole lot more. Plus, it’s a ‘progressive’ fee: people buying more expensive properties pay more for their transfer duty. This differs from a tax like the GST, which slugs everyone the same, no matter their wealth.

Like it or not – transfer duties are a big revenue earner in NSW. Still, it’s a massive hit to personal budgets, especially for first home buyers.

How much is it?

If you’re planning to buy a property, you’ll need more than the deposit. 

For homeowners in NSW you must pay transfer if you buy:

  • any residential property, including a home, holiday home or investment property
  • vacant land or a farming property.

A first homebuyer in NSW with a good bank balance purchasing an existing $900,000 house to live in will need to save about $20,000 for stamp duty. That’s on top of the $180,000 for a 20% deposit. So, more than $200k. Wow.

If you’re not a first homebuyer, this leaps to about $35,000 in duty for the same property.

While that is certainly a huge sum on money, many experts believe that in the long run, properties sell for what people can afford. If you have $90,000 saved, you can’t just buy a $900,000 property with a 10% deposit. But neither can anyone else. Stamp and transfer duties are factored into the cost of properties. If stamp duty disappeared tomorrow, it’s likely that house prices would increase by about the same amount.

Know your budget

Get an advantage. Mortgage Broker Sydney’s expert home loan brokers can work with you to make the most of the cash you’ve saved. 

There may be transfer concessions and low deposit government schemes available to you. And imagine finding a bank or other lender who will take less than 20% as a deposit. 

Depending on your personal circumstances, it just might be possible. 

Mortgage Broker Sydney brokers understand transfer duty, and can work with you to find ways to find the best possible loan for you. At no cost to you (ever) we’ll work out duties, payments, fees and the other costs involved in buying property.

We can then help you find the best possible loan to suit your individual circumstances and property ownership ambitions. We’ll even help with the paperwork and approval process. 

Contact us at Mortgage Broker Sydney today.