Stamp Duty

Stamp duty (formally transfer duty) is a state and territory tax you pay when a property changes hands. For a flipper it is one of the largest single line items after the purchase price and the renovation, and it lands as cash at settlement, so it has to be in the feasibility from the start, not treated as an afterthought.

Most states charge it on a marginal, tiered scale: a fixed base plus a percentage of the amount above each threshold, so the effective rate rises with price. As a working example, a $700,000 purchase in NSW attracts roughly $25,900 in transfer duty under the current Revenue NSW schedule. Queensland and Victoria calculate it differently and land at different figures for the same price, which is why you should never carry one state's number into another deal. Investors generally pay the standard scale; first-home buyers can access concessions or exemptions, but those rarely apply to a flip.

The traps that add to it

Two things catch flippers out. First, foreign-purchaser surcharges: NSW, for instance, applies an additional surcharge on top of ordinary duty for foreign persons, which can add several percent again. Second, timing — duty is due within a few months of exchange in most states, so it is real money out early in the project, compounding your holding costs for the whole hold.

For tax, stamp duty is not immediately deductible against a flip's income in the way interest might be; it generally forms part of the property's cost base, which matters when you work out the profit on sale. Because it is unavoidable and sizeable, duty is one of the costs the 70% rule buffer is meant to absorb — but only if you have modelled it at the right rate. Work out the exact figure for your state and price with the stamp duty calculator before you commit to an offer, and fold it into the wider flip ROI numbers. This is general information, not tax advice — confirm your position with a registered adviser.