Duty is Now Payable on Late Settlement Interest, so what does this mean for Purchasers?
What is stamp duty?
Stamp duty and purchasing a property have long gone hand in hand, but it’s prudent for purchasers to understand what the tax entails and how it is calculated.
Stamp duty describes the tax purchasers are required to pay on certain legal documents, usually in the transfer of assets or property. In the case of property transactions, stamp duty is calculated on the dutiable value of a property.
The dutiable value of your property will vary depending on factors such as which state or territory the property is located in, the value of the property, whether the property is your primary residence, whether the property is an existing dwelling or vacant land, your residence status and the purchase price of the property.
Stamp duty is an upfront cost which is paid at settlement.
When you engage Merton Lawyers as your conveyancers, we will provide you with an estimate of the stamp duty payable on your purchase at the beginning of the conveyancing process, to ensure you have a clear understanding of any additional costs.
Stamp duty is now payable on late settlement interest
Late settlement interest or penalty interest is a debt which may accrue, at the discretion of the vendor, when settlement fails to occur on the agreed upon date.
From 1 July 2022, dutiable value will include any late settlement interest resulting from a late settlement or the rescheduling of failed settlement. This means that late settlement interest is being treated as part of the consideration required for the ultimate transfer of land from vendor to purchaser.
As a result, purchasers subjected to late settlement interest will be required to pay stamp duty on the dutiable value of the late settlement interest in addition to stamp duty on the dutiable value of the property. Contracts of sale arrangements entered into on or after 1 July 2022 may need to be relodged for re-assessment should late settlement interest become payable.
What does this mean for purchasers?
The requirement to pay stamp duty on late settlement interest makes it even more important that purchasers do all things necessary to ensure they do not cause their settlement to be delayed.
The best way to achieve this is by being organised. From preparing your finances to completing the required documentation – the key is to ensure that every step of your conveyancing process is completed in a timely manner. One way of making certain of this is by carefully selecting the professionals you choose to assist you with your purchase.
At Merton Lawyers we adhere to strict and carefully prepared timelines in all our conveyancing matters. Our expertise and attention to detail mitigates the risk to purchasers and ensures that our clients are in the best possible position to settle on the agreed date.
How can we help you?
If you have any queries about the changes to stamp duty and late settlement interest or any other related matters, please contact our conveyancing team on 03 9645 9500 or via email.
Author, Danielle Murphy.
