Australian stamp duty: a guide for property investors

Stamp duty — more precisely, transfer duty— is a one-off tax every Australian state and territory charges when a property changes hands. It's paid by the buyer, calculated on the purchase price (or the market value, if higher), and due at or shortly after settlement. Unlike land tax or council rates, it's not an ongoing cost of owning a property — it's a cost of acquiring one, paid exactly once per purchase.

That one-off nature is precisely what makes it easy to underestimate. Because it never shows up again after settlement, it's tempting to treat it as a rounding error against a property's long-run performance. On a typical purchase it is anything but — commonly running to tens of thousands of dollars, and on a high-value property, well into six figures.

Every state and territory sets its own duty schedule, and most work the same way income tax does: marginal brackets. A lower rate applies to the first slice of the price, and progressively higher rates apply to each slice above it. A handful of jurisdictions switch to a flat percentage of the total price once it passes a threshold, rather than staying marginal all the way up — which is why the same $50,000 increase in price can add noticeably different amounts to the bill depending on exactly where that increase falls.

Want the exact figure for your own purchase, rather than the general shape of it? Use the Australian stamp duty calculator — it applies the current schedule for your state, with the foreign purchaser surcharge as an option.

To make the differences concrete, here's the standard transfer duty on the exact same $700,000 investment property purchase, in every state and territory.

On the same purchase price, the gap between the cheapest and most expensive jurisdiction can run to thousands of dollars — before either state has applied any surcharge. That gap is worth factoring into any decision about where to buy, not just what to buy.

Most states add a further foreign purchaser (or additional) duty surcharge— a flat percentage on top of the standard duty — for buyers who are foreign persons or foreign-controlled entities. It's significant: commonly 7–9% of the purchase price, added directly to the standard bill.

Stamp duty never appears in a rental yield calculation — yield is rent against price, and duty is neither — but it still has to be earned back before a property is genuinely ahead. Think of it as raising your real cost base: a $700,000 property with $30,000 of duty on top has to perform as if it cost $730,000, not $700,000, for you to break even on the deal overall.

Spread across a long hold, that's a manageable drag — a few tenths of a percentage point off your effective annual return, absorbed over ten or twenty years of rent and growth. Spread across a short one, it's a much bigger hurdle relative to the time you have to clear it.

This is where stamp duty stops being a rounding error and starts being a real constraint on the strategy itself. A buy-renovate-resell (“flip”) plan pays duty going in, agent commission and marketing costs going out, and — depending on structure and holding period — potentially capital gains tax on the way through, all inside a window that might be months, not years.

None of that means flipping doesn't work — it means the entry and exit costs have to be built into the sums from day one, not treated as an afterthought once the renovation budget is already spent. A hold measured in months has far less time to amortise a duty bill than a hold measured in years, so the required uplift on resale has to clear a higher bar.