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Stamp Duty on Commercial Property: A Guide For All States in Australia

Stamp Duty on Commercial Property: A Guide For All States in Australia

Few people enjoy paying taxes, but it’s an unavoidable expense for every Australian. 

One common tax is stamp duty (transfer duty)  which is a fee payable upon the purchase of a property.  Stamp duty doesn’t just apply to Australians looking to buy homes, but also to businesses that purchase commercial properties. The amount you pay depends on the value of the property you’re buying.

For your convenience, we’ve created a guide for stamp duty that will be required to be paid when purchasing commercial properties across all Australian states.

Read along!

Table of Contents

What is commercial property 

A commercial property is a property that you intend to use for business purposes. Commercial properties can include an office,  store or even a residential-style dwelling used for commercial gain. 

One of the main categories of land is commercial residential properties. However, there’s a surcharge land tax that provides exemptions for many commercial residential properties, including hotels, aged care, caravans etc.

What is Stamp Duty

Stamp duty is a state-based tax that is applied when a property is sold. It also includes the transfer of businesses, insurance and shares. The person who actually buys the property has to pay the tax. The Duties Act 1997 (NSW) specifies what properties are subject to stamp duty. The main thing to keep in mind is whether section 65 applies to you. This section covers all the different ways in which stamp duty would not apply. 

However, as a business or an individual, when purchasing a commercial property, you will usually need to pay stamp duty.

Calculating Stamp Duty

The NSW government has a calculator that you can use to check how much stamp duty you will have to pay. You may find that you are purchasing more than one commercial property. 

Therefore, in that case, the properties would be combined into one collective. To calculate the stamp duty, you will need the execution date and the purchase price of the property.

Stamp duty for commercial properties in New South Wales( NSW)

In New South Wales( NSW), according to the NSW Government’s Revenue NSW, you’re required to pay stamp duty( transfer duty) when you purchase a commercial property. It’s  possible to qualify for a concession or exemption from paying stamp duty in the following situations:

  • If you’re a beneficiary of a deceased estate
  • If the stamp duty is paid between a couple that is either married or de facto

When you have to pay stamp duty 

Generally, you’re required to pay stamp duty within three months from the date you sign the transfer or sale contract.

The exception to this three-month time limit is when you have made an off-the-plan purchase. Where you have made an off-the-plan purchase with the intention of living in the property, you might have the option to postpone paying stamp duty on your purchase for up to 12 months.

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How to calculate your stamp duty in NSW

You can use revenue NSW’s transfer duty calculator to calculate the amount of stamp duty you’ll be required to pay for your commercial property purchase.  

However, you should be aware that the stamp duty you’ll be required to pay depends on either the current market value or the sale price of the commercial property. You will be required to pay the higher amount between the two.

How to pay for your stamp duty in NSW 

Generally, a conveyancer or solicitor arranges the payment of your stamp duty. They must first lodge an application to Revenue NSW to have your contract for sale or transfer of land assessed. Typically, these steps are completed during settlement, and you’ll be notified about any stamp duty concessions or exemptions you qualify for.

In the absence of a conveyancer or solicitor, you’ll be required to submit your own application and pay your stamp duty independently.

Penalties

You’ll be charged interest if you don’t pay your stamp duty by the due date.  Furthermore, extra penalties can also be charged against you for late payments.

Stamp duty for commercial properties in Victoria(VIC) 

In Victoria, according to the Victorian State Revenue Office, you’re required to pay stamp duty when you purchase a commercial property.  The amount of stamp duty you will need to pay depends on the following factors:

  • The date on which the contract to purchase your property was signed or, in the absence of a contract, the date on which the property was transferred
  • The stamp duty is also based on the dutiable value a property has, which is either the property’s market value when the contract was signed or the price the property was purchased for. The dutiable value is the value that is higher between the two

There are several types of stamp duty exemptions, concessions,  or reductions available for commercial property purchases in Victoria. These include the following:

  • You’ll receive a concession if the property you’re purchasing is your primary place of residence
  • You’ll receive a concession if you have purchased a regional commercial property
  • If you’re a first home buyer, you will qualify for a reduction, concession or exemption for your purchase
  • An exemption will apply if you’re a beneficiary who’s receiving a deceased person’s land transfer
  • An exemption also applies if the land is being transferred to a partner or spouse. This exemption applies to relationship breakdowns as well

You should also be aware that you’ll be charged an additional duty for your purchase if you’re a foreign purchaser.

How to calculate your stamp duty in Victoria

You can use Victoria’s State Revenue’s Office stamp duty calculator to determine how much stamp duty you’ll have to pay.  

If you’re making an off-the-plan purchase, you can qualify for a concession. There are various requirements that have to be met to be eligible, including the following:

  • Firstly, to qualify for the off-the-plan concession, you need to qualify for either a first home buyer exemption or concession or a principal place of residence concession
  • You must be over the age of 18 unless you’re the guardian of an individual who has a legal disability
  • You or at least one other purchaser of the property are required to occupy the property continuously for at least 12 months. This period must begin within 12 months of when the property is possessed 
  • To qualify for the concession, the value of the property generally can’t exceed $550,000. However, for first-home buyers, the value can’t exceed $750,000

Stamp duty for commercial properties in Queensland(QLD) 

In Queensland, the Queensland Government requires you to pay stamp duty for commercial property purchases. The requirement to pay stamp duty in Queensland is imposed by the Duties Act 2001. The amount of stamp duty you’re required to pay depends on the following factors:

  • You will either be required to pay stamp duty on the basis of the unencumbered value of the property 
  • Alternatively, you may be required to pay stamp duty on the basis of the payment you agree to make ( the consideration)

You’ll be required to pay the higher amount between the two, which is known as the ‘dutiable value.

Concessions are available for stamp duty when you purchase a home. There are three types of concessions available for the purchase of homes, including the following: 

  • First home vacant land concession: You can claim a concession when you purchase vacant land if the purchase is for the purpose of building your first new home and occupying it.
  • First home concession- You can claim a concession when you’re purchasing a residence for the purpose of living as your first home
  • Home concession: With this type of concession, you can claim if you’re purchasing a residence for the purpose of occupying it as your primary residence

You should be aware that a first home concession is not the same as a first home owner grant.

There are also several exemptions to transfer duty, including the following:

  • Matrimonial exemptions
  • Home or property owner exemptions
  • Charitable institution exemptions
  • Death of a property owner exemption 

When do you need to pay stamp duty in Queensland?

To be able to pay for your stamp duty, you first need to lodge your documents to get stamped within 30 days of getting them signed.

After your documents have been assessed, you’ll be told how much stamp duty you must pay.

You can pay your stamp duty to the office of state revenue using the following methods:

  • Electronic funds transfer
  • Cheque or money order
  • Telephone or internet banking
  • Credit card

How to calculate your stamp duty in Queensland 

You can use the Queensland Government’s stamp duty calculator to determine how much stamp duty you’ll need to pay. Similarly, you can also use the Queensland government’s stamp duty estimator to calculate the amount of stamp duty you’ll need to pay.

Stamp duty for the remaining Australian States

It’s important to note that each state government and territory government has its own transfer duty department. These include the following:

Conclusion

Ultimately you should prepare to pay your stamp duty taxes in advance to avoid being caught off-guard. If you’re still unsure about the stamp duty you’ll be required to pay, you should hire a lawyer

A lawyer can tell you how much tax you may be required to pay if you purchase a particular property, assist you with paying your stamp duty and stay legally compliant.

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