If you’re thinking about knocking down and rebuilding a house in Australia, you may be wondering if you’re required to pay stamp duty. Stamp duty is a tax that’s levied by state and territory governments on various types of transactions, including property purchases.
In this post, we’ll examine whether stamp duty is applicable while you’re working on a knockdown and rebuild project as well as some other vital factors you should keep in mind.
What is a knock down rebuild?
A knock down rebuild involves demolishing an existing home and rebuilding a new one on the same block of land. This type of project is becoming increasingly popular in Australia, particularly in established suburbs where land is at a premium.
The benefits of a knock down rebuild include the option to use contemporary building materials and methods while designing a home that meets your unique wants and preferences.
Do you pay stamp duty on a knockdown and rebuild?
One of the benefits of a knockdown and rebuild is that you may be exempt from paying stamp duty on the purchase of your new home. This exemption applies in some states, including New South Wales, Victoria, and South Australia.
In New South Wales, for instance, if you destroy your current home and construct a new one on the same plot of land within 12 months, you may be excused from stamp duty. The rebuilding cost must be over $450,000, and you must have resided in the property for at least 12 months prior to demolition.
Similarly, if you demolish your current home and construct a new one on the same piece of property within three years, you may be eligible for a stamp duty exemption in Victoria. The value of the land and any new construction is exempt.
South Australian properties that are demolished and rebuilt within five years are also exempt from property tax. The exemption covers the land and any new improvements made to it up to a total value of $550,000.
It’s important to note that the rules around stamp duty exemptions can vary between states, so it’s a good idea to check with your state revenue office to see if you’re eligible.
While you may be exempt from paying stamp duty on a knockdown and rebuild, there are other costs you’ll need to factor into your budget. These may include:
You’ll need to factor in the cost of demolishing your existing home, which can vary depending on the size and complexity of the job.
The cost of building a new home can vary depending on the design and materials you choose, as well as the location and size of the property.
You’ll need to pay various fees to your local council, including planning and building application fees, as well as any contributions to infrastructure and services.
If you’re borrowing money to finance your knock down rebuild, you’ll need to factor in the cost of interest and fees on your loan.
Undertaking a knock down rebuild can be a great way to create your dream home on an established block of land. While you may be exempt from paying stamp duty on your new home in some states, there are other costs you’ll need to consider, such as demolition, building, council fees, and financing costs.
Before you start your knockdown and rebuild project, it’s important to do your research and get advice from professionals such as architects, builders, and financial advisers. By doing your due diligence, you can ensure your project is a success and your new home meets your needs and preferences for many years to come.