Stamp duty in NSW: transfer duty explained

Stamp duty is one of the largest upfront costs when buying property in New South Wales. In NSW it is officially called transfer duty, but it is the same thing. This guide explains when you pay it, how it is calculated, and whether you qualify for any exemptions.

What is transfer duty?

Transfer duty (stamp duty) is a state government tax administered by Revenue NSW. It is payable when ownership of a property is transferred, most commonly when you buy real estate. The tax is set by the Duties Act 1997 (NSW).

Transfer duty applies to most transactions involving NSW land or property, including:

• Residential house and apartment purchases
• Vacant land purchases
• Commercial property purchases
• Transfers of property between individuals (including family transfers, in some cases)
• Certain business asset transfers involving land

It does not apply to rental payments or to buying shares in a property company (unless the company holds significant NSW land, in which case landholder duty may apply).

Who pays transfer duty?

Transfer duty is paid by the buyer (transferee), not the seller. In a standard residential purchase, the seller does not pay transfer duty on the sale. The buyer is responsible for paying transfer duty in addition to the purchase price.

Transfer duty is a significant upfront cost that buyers need to budget for before they commit to a purchase. It is paid to Revenue NSW separately from and in addition to the purchase price paid to the vendor.

How transfer duty is calculated

Transfer duty is calculated on the higher of the contract price or the property's market value. It is a graduated (progressive) tax: the higher the property value, the higher the effective rate.

The Duties Act 1997 (NSW) sets out the rate brackets. The duty applies to the total dutiable value and increases by bracket as the property value rises. Because the duty is graduated, a small difference in purchase price near a bracket threshold can result in a meaningful change in the total amount owed.

Revenue NSW provides an official online calculator:

When is transfer duty due?

Transfer duty is generally due within three months of the date of the contract, or within three months of completion of the agreement (whichever is later). In practice, it is almost always paid at or before settlement, because the transfer of title cannot be registered until the duty has been assessed and paid (or a duty-free endorsement has been noted).

Your conveyancer or solicitor will handle the duty assessment and payment as part of the settlement process. You will need to have the funds available prior to settlement.

How to estimate your amount before you get a formal assessment

Before engaging a conveyancer, you can get a rough estimate using the Revenue NSW calculator linked above. The estimate requires:

• The purchase price (or estimated price if you have not yet exchanged contracts)
• Whether the property is your principal place of residence
• Whether you are a first home buyer
• Whether you are a foreign person (surcharge purchaser duty may apply)

The calculator result is an estimate, not a formal assessment. Your conveyancer will submit a formal duty assessment to Revenue NSW once the contract is executed.

First home buyer exemptions and concessions

NSW offers significant transfer duty savings for eligible first home buyers under the First Home Buyers Assistance Scheme (FHBAS). The current thresholds, effective from 1 July 2023, are:

For new and existing residential properties

• Full exemption: purchase price or value at or below $800,000. No transfer duty is payable.
• Concessional (reduced) duty: purchase price or value above $800,000 and below $1,000,000. A reduced rate applies on a sliding scale.
• No concession: purchase price or value at $1,000,000 or above. Full transfer duty applies.

For vacant land

• Full exemption: land value at or below $350,000.
• Concessional rate: land value above $350,000 and below $450,000.

Eligibility conditions

To qualify, you and any co-purchaser must:

• Be an Australian citizen or permanent resident
• Be 18 years of age or older
• Never have previously owned residential property anywhere in Australia (and have never previously received a first home buyer exemption or concession)
• Intend to occupy the property as your principal place of residence, moving in within 12 months of settlement and living there for at least 12 continuous months

The scheme applies to both new and existing homes within the eligible thresholds. Company and trust purchasers are generally not eligible. If a co-purchaser is not a first home buyer, the concession is proportionally reduced.

See our detailed guide: First home buyer NSW: stamp duty exemptions, grants and schemes

Other exemptions and concessions

Transfer duty exemptions and concessions exist for certain other transaction types. Revenue NSW administers these and publishes the full list at their exemptions and concessions page. Common examples include:

• Transfers between spouses and de facto partners: transfers of a principal place of residence between married or de facto couples in some circumstances (specific eligibility conditions apply, including the property being a principal place of residence).
• Deceased estate transfers: a transfer of property from a deceased estate to a beneficiary who was a co-owner may be exempt in some circumstances.
• Transfers to charities: certain transfers to eligible charities are exempt.

If you think an exemption might apply to your transaction, discuss it with your conveyancer or solicitor before exchange. Incorrectly claiming an exemption can result in penalties.

Off-the-plan and transfer duty

Buying off-the-plan means you exchange contracts before the property is completed, sometimes years in advance. Transfer duty is generally assessed at the date of the contract (or completion of the agreement), using the dutiable value at that time.

First home buyers purchasing new off-the-plan dwellings may be eligible for the FHBAS exemption on the land value component (subject to eligibility conditions). However, off-the-plan contracts are complex and the duty position can change if the purchase is assigned before completion. Off-the-plan buyers should obtain specific legal advice.

Surcharge purchaser duty for foreign persons

Foreign persons (as defined in the Duties Act 1997 (NSW)) who acquire residential property in NSW pay an additional surcharge purchaser duty on top of standard transfer duty. Revenue NSW publishes current surcharge rates and the definition of "foreign person" at revenue.nsw.gov.au. The surcharge is calculated on the dutiable value of the residential land component.

How your conveyancer handles transfer duty

Once you exchange contracts, your conveyancer or solicitor:

1. Submits a duty assessment to Revenue NSW (via their secure portal)
2. Advises you of the assessed amount and the date by which it must be paid
3. Ensures payment is made and the contract is duty-endorsed before or at settlement
4. If you are a first home buyer, lodges the FHBAS exemption or concession application on your behalf

Transfer duty must be assessed and paid (or exemption confirmed) before the title transfer can be registered with NSW Land Registry Services. Your conveyancer manages this timeline as part of the settlement process.

Conveyancing Explained provides general information about property transactions in New South Wales. It is not legal advice and does not create a client relationship. For advice on your situation, engage a licensed NSW conveyancer or a solicitor.