Short answer: in NSW, stamp duty (Revenue NSW calls it transfer duty) is worked out on the purchase price, it goes up faster than the price does, and in most cases you pay it from your own money rather than borrowing it. First home buyers get a full exemption up to $800,000 and a partial one up to $1 million. Above that, everyone pays the full amount.

That last point is the one that catches people out locally. Most houses on the North Shore and the Northern Beaches sell above $1 million, so for a lot of our clients the first home buyer break simply doesn't apply. The duty has to come out of savings, and every dollar spent on it is a dollar that isn't going into the deposit.

How stamp duty is worked out in NSW

Duty is charged on the dutiable value of the property, which is normally the price on the contract. The rate steps up in bands, so a $2 million house doesn't attract twice the duty of a $1 million one. It attracts more than that. The thresholds are indexed each year, which is why we don't quote dollar figures here. The Revenue NSW calculator will give you the exact number for a price, and it's worth running before you set a budget.

Duty is due within three months of exchange, and in practice it's paid at or before settlement. Your conveyancer or solicitor will normally handle the payment, but the money has to be there.

The first home buyer exemption and concession

Under the First Home Buyers Assistance Scheme, if you're buying your first home in NSW to live in:

  • Up to $800,000: no transfer duty at all, for new or existing homes.
  • $800,000 to $1 million: a reduced amount, which shrinks the closer you get to $1 million.
  • $1 million and over: no concession. You pay full duty.
  • Vacant land you plan to build on: exempt up to $350,000, with a concession up to $450,000.

There are conditions. You (and your partner, if you're buying together) can't have owned a home in Australia before, and you need to move in within 12 months and live there for at least six months straight. Check the current rules with Revenue NSW before you rely on it, because eligibility details do change.

Where this lands locally

Around the area we work in, the exemption tends to matter for units, not houses. One and two bedroom apartments in suburbs like Dee Why, Brookvale, Chatswood, North Sydney and Artarmon can come in under $800,000 or inside the concession band. If you're a first buyer and you're torn between a unit just under $1 million and one just over, the duty difference can be significant, so it's worth running both numbers before you decide where to bid up to.

For houses, and for anyone who has owned before, assume full duty and plan for it from the start.

Why it matters so much for your deposit

Lenders work out your loan-to-value ratio on the purchase price, not on the price plus costs. So if you've saved a set amount, part of it goes to stamp duty, legal fees and inspections first, and only what's left counts as your deposit. On a Sydney purchase without the exemption, the duty can easily be the difference between a 20% deposit and something less.

Drop below 20% and you'll usually pay lenders mortgage insurance. Some lenders let you add that to the loan, but stamp duty itself generally can't be borrowed as part of the purchase loan. The main exception is where you already own property with enough equity to draw on, which is how a lot of upgraders and investors cover it.

If you're a first buyer using the 5% Deposit Scheme, you still need the duty in cash on top of your 5%, unless the property falls inside the exemption.

Upgraders: duty is the real cost of moving

When you sell one house and buy another in the same area, the stamp duty on the new place is money you won't see again. On North Shore house prices it's often the largest single cost of the move, ahead of agent's fees. That's why so many families in suburbs like Willoughby, Lindfield and Frenchs Forest weigh up renovating instead. It doesn't always come out cheaper, but it's worth putting the two side by side.

If you're buying before you sell, the duty is due on the new purchase whether or not your old place has sold. Factor it into any bridging loan plan, because it's one of the costs that has to be funded before the sale money arrives.

Investors

Investors pay full duty, and there's no first home exemption on an investment property even if it's your first purchase. If you buy as a first home, the exemption depends on you actually living there for the required time, so renting it straight out can mean the duty becomes payable after all. If you buy in a trust or company, or you're not an Australian citizen or permanent resident, extra rules and surcharges can apply. Talk to your accountant or solicitor about the structure before you sign.

A simple way to plan for it

  • Work out the price range you're realistically looking at, then run the top and bottom of it through the Revenue NSW calculator.
  • Add legal fees, building and pest inspections, and a buffer for moving.
  • Take that total off your savings. What's left is your actual deposit.
  • Get a pre-approval based on that number, not on your total savings.

This is one of the first things we go through with new clients, because it changes what you can bid. If you'd like us to run the numbers on a property you're looking at, get in touch.

Frequently asked questions

Do first home buyers pay stamp duty in NSW?

Not up to $800,000, as long as you meet the eligibility rules. Between $800,000 and $1 million you pay a reduced amount. At $1 million and above you pay full duty.

Can I add stamp duty to my home loan?

Generally not as part of the purchase loan. Lenders lend against the property's value, and duty isn't part of it. If you already own property with enough equity, you may be able to borrow against that to cover it.

When is stamp duty paid in NSW?

It's due within three months of exchange, and it's usually paid at or before settlement through your conveyancer or solicitor.

Does stamp duty reduce my deposit?

In effect, yes. Lenders measure your deposit against the purchase price, so money spent on duty and other costs doesn't count towards it.

Do investors get a stamp duty concession?

No. The first home buyer exemption and concession only apply if you buy the home to live in and meet the residence requirements.

General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy, rates and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here.