Stamp duty, also known as transfer duty, is a state and territory tax payable when property ownership changes. While residential and commercial property transactions are generally assessed using similar base rate scales, the total duty payable can differ materially. This difference is driven by premium duty rates, foreign purchaser surcharges and buyer specific concessions, which apply to residential property. Commercial property is typically assessed at standard rates with fewer additional fees or concessions.
Understanding how stamp duty applies to each property type, and how this differs across states, is important when assessing the true cost of a property purchase.
Residential stamp duty is calculated on the purchase price or market value of the property, whichever is higher. Each state applies a progressive rate structure, meaning higher value properties attract higher marginal rates. Residential buyers may also be eligible for concessions, such as first-home buyer exemptions or principal place of residence discounts. Conversely, additional charges may apply, including premium duty rates and foreign purchaser surcharges.
Premium duty is a consideration factor for high-value residential property. Once a property's value passes a set threshold, the portion above it is taxed at a higher rate than the standard sliding scale. This means the most expensive homes carry proportionally more duty. Commercial property has no equivalent top tier. It is assessed on the standard scale no matter how high the price.
For buyers at the upper end of the residential market, this premium tier can add a meaningful amount to the total, so it is worth building into your cost estimates. You can use Yard's stamp duty calculator to estimate the duty payable on your residential purchase. Note that the current rate and threshold are set by state revenue offices and change periodically. Confirming the current figures before committing to a purchase is recommended.
In some states, foreign buyers of residential property pay a surcharge purchaser duty on top of the standard duty rate. The surcharge is set by the respective state revenue office and applies in addition to the standard progressive rate. The surcharge is charged as a percentage of the purchase price, which means the higher the price, the larger the surcharge. It can add a substantial amount to the total duty payable.
Commercial property is generally not subject to this surcharge, regardless of the buyer's residency status. This is a significant practical difference for foreign investors comparing residential and commercial acquisitions.
Australian citizens living overseas are generally not treated as foreign purchasers for stamp duty purposes, however additional documentation may be required. Rules vary by state, and confirmation with the relevant state revenue office is recommended.
A residential property purchased for $1,000,000 by an Australian citizen buying an owner-occupied home would attract standard residential transfer duty based on the relevant state or territory sliding scale. If the same property were purchased by a foreign buyer, a foreign purchaser surcharge would generally apply on top of the standard duty, increasing the total payable.
Some states also apply higher duty rates on higher value residential properties, which can further increase the amount payable. Rates and thresholds vary between states, so current figures should be confirmed with the relevant state revenue office.
Commercial stamp duty is also calculated on the higher of the purchase price or market value using the standard state-based rate scale. However, commercial transactions generally do not attract premium duty rates or foreign purchaser surcharges. There are also no first-home buyer or owner-occupier concessions for commercial property. Foreign buyers should also note that, separate to stamp duty, a commercial purchase may require FIRB approval depending on the investment value and type of land, so it is worth confirming current requirements before proceeding.
A commercial warehouse purchased in New South Wales for $1,000,000 would be assessed using the standard transfer duty scale only. For a domestic buyer, the duty payable is broadly the same as on a residential property at the same price. Neither property type offers a meaningful duty advantage at this price point for Australian buyers, as no concessions apply to commercial property and the base rate scale is the same for both. The difference becomes significant for foreign buyers: the surcharge purchaser duty that applies to residential property generally does not apply to commercial property, making commercial acquisitions potentially cheaper at equivalent purchase prices.
Yard is a specialist non-bank lender with experience across residential and commercial lending, including non-standard income, complex and high-value commercial lending.
We offer commercial property loans across a range of scenarios, including low rate and lease doc commercial purchases, SMSF lending and low-doc applications. For residential buyers, we offer a broad range of home loans and investment property loans, with options for self-employed borrowers, non-standard income and complex ownership structures.
A Yard Loan Consultant can work through the details of your purchase or refinance from initial enquiry through to settlement. Speak with a Yard Loan Consultant directly to discuss your borrowing options.
Residential and commercial property generally share similar base stamp duty calculations across Australia. The key difference lies in the additional fees and charges. Residential property may attract premium duty rates and foreign purchaser surcharges, but may also qualify for concessions. Commercial property is typically assessed at standard rates without surcharges or concessions, resulting in more consistent stamp duty outcomes.
It depends on the state and your circumstances. In most states, the base rates are similar. However, commercial property typically avoids foreign purchaser surcharges and premium rates, which can make it cheaper for high-value purchases or foreign buyers.
There are several concessions that can help reduce or eliminate this expense if you're eligible.
First home buyer concessions offer the most substantial savings across all states and territories, with exemptions or reductions available for properties under certain value thresholds that you'll occupy as your principal place of residence. Even if you're not a first home buyer, some states offer owner-occupier concessions with reduced rates compared to investment properties.
Off-the-plan purchases of apartments or townhouses may attract concessions in some states, designed to encourage new housing development. Regional and rural areas frequently have higher thresholds or better concessions to stimulate development outside major cities. Additionally, purchasing vacant land to build your home may qualify for buyer benefits.
Given the complexity and frequent changes to stamp duty rules, it's essential to consult a conveyancer or solicitor who can identify all applicable concessions, use your state revenue office's official calculator for accurate estimates, and verify current eligibility requirements to maximise your concessions. Read Yard’s guide on Stamp duty exemptions in Australia.
Each state and territory sets the rate of stamp duty. You can use a stamp duty calculator to give you an idea of how much you'll be required to pay. In general, stamp duty is calculated by multiple factors, including:
To use Yard's stamp duty calculator, you just need to enter the purchase price, the property location, property purpose and whether it's your first home.
Both residential and commercial property use similar base rate scales, so for domestic buyers the duty at any given price is broadly comparable. The differences arise from additional charges and concessions.
Residential property may attract premium duty rates and foreign purchaser surcharges, but may also qualify for first home buyer or owner-occupier concessions. Commercial property is typically assessed at standard rates only, with no surcharges or concessions, making the duty payable easier to estimate in advance.
Generally no. Australian citizens typically qualify for resident treatment even when living abroad but you may need to provide documentation. Rules vary by state, so verify with the relevant state revenue office as well as your conveyancer.
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