Stamp Duty is actually now called “Transfer Duty” – so when you see “Transfer Duty” referred somewhere what they are actually referring to is the well known and much despised “Stamp Duty”.
So when does a Purchaser pay Transfer duty? The answer to this is not the same for all Purchasers. It depends on when the Contract requires settlement because Transfer duty is due on or before the earlier of:
Settlement; and
3 months after the Contract date.
So whatever occurs first! The 3 months from the date Contracts are exchanged (the date on the front page of the contract) or settlement.
For most Purchaser’s they will purchase a property with a settlement period of less than 3 months and therefore will pay their Transfer Duty on settlement. For those who have purchased a property with a settlement period longer than 3 months then they will pay it prior to the “3 months” from the date of the Contract. This is the case even if the property you are purchasing is “unregistered land” and doesn’t yet exist.
There are exceptions to the three (3) month rule for “off-the-plan” purchases should you meet the eligibility requirements. An off-the-plan purchase is one where a purchaser enters a contract to buy a ‘house and land’ package’ and settlement is required once the house iscompleted. In this case, a Purchaser may be eligible to defer duty for a period of 12 months (so a total of 15 months to pay the TransferDuty form the date of the Contract) should they meet the required eligibility requirements.
It is important for all Purchasers to factor in the cost of Transfer Duty and consider when it is to be paid before entering a Contract to purchase any type of real estate in New South Wales because if they cannot pay the Transfer Duty when due then they will be liable for penalty interest in addition to the applicable duty amount at the rate set by Revenue NSW.
This article was published on 27/9/24 and the information is valid as at the date of publishing. This article is general in nature and is not and should not be considered or relied on as legal advice. Meehans Solicitors is not responsible in the event this information is relied upon by the reader in the absence of specific legal advice.
