Most Australians, unless they’re born extraordinarily wealthy, have to spend years of their lives saving money before they’re finally ready to buy a house. This means drawing up a solid plan for making mortgage payments every month in perpetuity, as well as putting away a lot of funds just to make the down payment initially. This alone is taxing, but unfortunately, the financial challenges don’t end there.

Stamp duty is one part of the price of a home that often goes overlooked, but unfortunately it can be pretty significant. If you’re saving money to buy a house, you had better include those extra few percentage points as part of the total amount you’re building towards.

How stamp duties are calculated

As you’re doing the maths and trying to calculate how much your family can afford to spend on a house, home loan interest rates aren’t the only variable you’ll need to factor into your calculations. Stamp duties are also a considerable expense, and you’d be remiss to overlook them.

According to the South Australia Department of Treasury and Finance, the methods used to calculate stamp duties vary from state to state. Sometimes it’s a flat rate; in other instances, the amount charged is a percentage of the price of a home. For example, if you’re paying $300,000 to buy a house, you may owe the government 3 per cent, or $9,000 – not an insignificant sum of money.

Saving wisely for your financial goals

Not many people have $9,000 just lying around the house. The reality is if you want to be prepared to pay the stamp fees you owe, you’ll need to save up for them. This can be difficult because the rules and regulations vary so much depending on where you live and what sort of property you’re buying.

Given the unpredictability of stamp duty payments, it’s best to save aggressively, just in case you end up owing more than you expected. In addition, you can use resources online (such as those provided by the Australian Securities and Investments Commission) to calculate your tax burden. After that, contact us so we can put a plan in place to help you keep costs manageable.