Stamp duty is a tax that you have to pay when purchasing a house. It is a significant expense and without a doubt puts an additional strain on home buyers. The smart way out is to use OPM (Other People’s Money) to pay it – whenever possible. Here is how it can be done:
How to use First Home Owners Grant to pay stamp duty
Most people who buy their first home in Australia qualify for the First Home Owners Grant and the Bonus. To check the exact amounts visit the State Revenue Office website – it doesn’t make sense quoting the figure here because they keep changing it. A very handy feature of FHOG (First Home Owners Grant) is that you can offset stamp duty against the First Home Owners Grant and the Bonus.
Basically it means that you subtract your First Home Owners grant from the stamp duty you owe and only pay the rest of it. For example, let’s say you’ve bought a house and paid 350,000 dollars for it, the stamp duty you’ll have to pay is about 13,800 dollars , but you’re entitled to FHOG (5000 dollars) and the Bonus (3000 dollars), so offset that against the stamp duty (13,800 – 5000 – 3000 = 5800) and you only have left to pay 5800 dollars.
After the settlement went through, by law the buyer has to pay the stamp duty within 90 days of settlement. The best way is to fill an application for FHOG (download the application form and guide here) and give it to your conveyancer together with certified copies of the required documents (your application form has a list of those). If you are not sure what “certified copies” are, this article explains how to prepare certified copies of documents.
Don’t forget to tick the box on your FHOG application that says “Would you like to offset the grant against the duty payable on the transaction”. The conveyancer will lodge the application with SRO (State Revenue Office) and let you know how much of the stamp duty you have left to pay.