• Transfer duty in NSW is calculated based on your property’s market value, and not just the purchase price.

• Payment is due within 3 months of contract signing, or from the date of transfer if there’s no formal contract, and delays can affect your property transfer.

• An accurate property valuation is key to avoid overpaying and make sure you comply with Revenue NSW requirements.

If you’re like many Australians who dream of owning a home, you might think that once you’ve saved for it, you’re all set. But there’s one big upfront cost that often catches buyers off guard, and that’s transfer duty.

This government tax can quietly add tens of thousands of dollars to your overall costs, and if you don’t fully understand what it is and how it works, you may be surprised as to how it could quickly blow out your property budget.

What is transfer duty?

Previously known as stamp duty, transfer duty is a tax imposed by state governments when you buy a property or legally transfer property ownership.

While its initial purpose was to cover the administrative costs like stamping and filing documents when transferring properties (Australasian Journal of Regional Studies, 2003), today, transfer duty has grown into a major financial obligation that every property buyer needs to plan for.

How is transfer duty calculated?

Transfer duty calculation is based on the property’s value and varies depending on which state you’re buying in. In New South Wales, the more expensive your property, the higher the transfer duty you’ll pay.

For example, the rate starts at $1.25 for every $100 for properties valued at $17,000 or less. This rate can go as high as $5.50 for properties valued over $1,212,000.

Here’s a quick overview of how transfer duty NSW is calculated based on property value.

Source: Revenue NSW (2024)

To skip the hassle of doing the math and have a quick estimate of how much you’ll need to pay based on your property’s value, you can use the online NSW transfer duty calculator.

Who pays transfer duty and when?

In almost all cases, if you’re the one buying the property, you’re responsible for paying the transfer duty. In NSW, your payment is often due within three months of signing the contract, or from the date of transfer if there’s no formal contract.

It’s a crucial part of the settlement process, because your property can’t be legally transferred into your name until this amount is paid in full. So it’s not something you can push to the side.

When does transfer duty apply in NSW?

Most people expect to pay transfer duty when they buy a house, but you might be surprised by how many situations it actually applies to. In NSW, you’ll need to pay transfer duty if you:

• Buy a residential property (that includes your home or holiday home)
• Purchase an investment property
• Buy a vacant land or farm
• Acquire commercial or industrial property
• Buy a business that includes land

But even if you didn’t technically buy the property, you may still be liable for transfer duty if:

• You received the property as a gift
• There’s a change in beneficial ownership, like through a trust
• You’ve made a declaration of trust that involves a property
• There is a transfer between related parties

The bottom line is if a property (or a share in it) is changing hands, there’s a good chance you need to pay transfer duty. So make sure you plan for it early and factor it into your total property budget.

What affects how much transfer duty you have to pay?

There’s no fixed rate when it comes to paying transfer duty in NSW. Here are a few key factors which can influence your transfer duty calculation:

• The value of your property and what it’s being used for (residential vs commercial)
• Your buyer status, for instance, if you’re a first-home buyer, investor, or foreign person
• Where your property is located, and whether the title is freehold or leasehold
• Whether you’re eligible for exemptions or concessions, like the First Home Buyer Assistance Scheme or other available exemptions

As a general advice, it’s always best to check the latest information from the Revenue NSW for the most up-to-date transfer duty rules, as they may change year after year.

How transfer duty impacts your overall property budget

Transfer duty is one of the biggest costs, apart from your property’s purchase price, so you need to factor it in early to effectively plan your budget and investment strategy.

For example, let’s say you’re buying a $1 million home, you could be facing tens of thousands in transfer duty. That’s a huge chunk of money which you could have already used for renovations, landscaping, or savings. And since this cost is usually due before or during settlement, miscalculating your transfer duty amount could delay your transaction, or worse, it can even put your deal at risk.

Why accurate property valuations matter for transfer duty

Here’s the tricky part: your transfer duty amount is often based on your property’s fair market value, not just the contract price.

This is especially important when:

• Buying off-market
• Transferring property within family
• Dealing with trust arrangements or inherited property

In these situations, Revenue NSW will rely on a market valuation to know the correct amount of duty. If the value reported is too low, you could face penalties. If it’s too high, you might overpay.

That’s why a professional, independent property valuation is essential. It ensures your transfer duty calculation is accurate and reliable, giving you peace of mind and avoiding surprises later on.

Final Thoughts

Transfer duty might not be the first thing on your mind when you’re house hunting or looking for a property to invest in, but it’s one of the most important costs to consider. From your overall budget and investment strategy to your settlement timeline, understanding what transfer duty is, how much it will cost, and when it applies can help you stay in control and avoid costly delays.

And if you’re unsure about your property’s true market value, that’s where our team at Independent Property Valuations (IPV) can help. We specialise in certified, professional valuations trusted by property buyers, investors, lawyers, and accountants across NSW. With decades of experience in the property market, we help make sure your transfer duty is based on a fair and accurate value, so you meet Revenue NSW’s requirements without overpaying.

Not sure how much transfer duty you’ll need to pay? We’re here to help.

Reach out today and let’s determine exactly what your property is worth, so you know how much you need to be paying when you transfer your property.

*This article is for general informational purposes only and does not constitute legal, financial, or taxation advice. For personalised advice, please consult a qualified accountant, tax advisor, or the Revenue NSW.