Stamp Duty Valuations: a Brief Overview

Stamp duty valuations may be necessary for property buyers or recipients of property as a gift from a family member, friend, or business partner and the property was not advertised on the open market.

One of the biggest costs associated with buying a property is stamp duty. Yet when they realise how much stamp duty they must pay, many purchasers and investors are in for a rude shock.

Stamp duty (now called transfer duty), is a tax imposed on the transfer of ownership when buying a property. The market value of the property at the time of transfer, which must be assessed by a Certified Practising Valuer in accordance with legislative requirements of the State Revenue Office, determines the stamp duty amount. <More>

How Much Stamp Duty is Payable?

This will depend on:

whether you are a first-time home buyer or not;
the property's market value (or purchase price); and
if the property is your primary residence or an investment.

Is Stamp Duty Paid on the Purchase Price or the Market Value?

The value of the property indicated in the contract of sale usually determines how much stamp duty you will be required to pay. But depending on the circumstances, the value could be the assessed value from a stamp duty valuation.

Stamp duty valuations are not always mandatory whenever stamp duty needs to be paid.

The selling price stated in the contract of sale is typically accepted by the State Revenue Office as the basis for an assessment of the stamp duty to be paid.

But let's say the property is sold through negotiation between related parties instead of between unrelated parties (i.e., on the open market). If so, the State Revenue Office must make sure that the stamp duty paid is in line with the property's fair market value.

It's important to remember that stamp duty must be paid irrespective of whether or not the transfer affects a monetary transaction. In other words, stamp duty is charged even if no money is exchanged between the parties.

A common example of ownership transfer where no money is exchanged could be when property is placed into a trust.

The State Revenue Office will usually require stamp duty valuations in the following situations:

When transferring property between relatives, such as a father and daughter.
When transferring property into a superannuation fund.
When transferring property between trusts or other related legal entities.

Stamp duty valuations must be undertaken by an experienced Certified Practising Valuer in each of the aforementioned situations.

What Methods are Used by Property Valuers to Complete Stamp Duty Valuations?

The stamp duty valuation by the Property Valuer must be based on fair market value and the following:

the size and construction of the property;
the location of the property;
the type of property in question; and
surrounding facilities like shopping, schools and public transportation.

To assess the fair market value, the property valuer usually uses one (and sometimes two) of the traditional valuation approaches, namely: Sales Comparison, Income Approach and Cost Approach.

Are Property Valuations Reliable?

A vital component of many different property transactions, including stamp duty is the valuation of property.

Property valuers are expected to apply due diligence in their valuation and offer information that is as accurate as possible because they are legally responsible for the valuation they provide.

Property Valuers perform extensive research in the following areas to achieve this:

the location and neighbourhood;
the state of the property;
the sales of comparable properties, and
current market data.

An appraisal by a real estate agent can assist in determining an estimated selling price, but a real estate agent's appraisal is not legally binding and lacks the depth of information you would get in a property valuation carried out by a certified property valuer.

**Why Appoint AskTheValuer to Carry Out a Stamp Duty Valuation for Your Property?**

The goal is to ensure that you are not paying a cent more in stamp duty than necessary. And it will be carried out for you at a reasonable fee.

The valuation will be performed by the independent Principal Valuer @ AskTheValuer, a very experienced, skillful and knowledgeable professional who has done numerous such valuations in over 15 years. For more details about the valuer, go to <About>.