Buying a car is exciting but let’s be real, no one loves the extra costs. Luckily, there are ways to minimise or even avoid some added expenses, like stamp duty. Whether you’re purchasing a new or used vehicle, understanding what stamp duty is and how it actually works can help you save big.
What Is Car Stamp Duty?
Before we get into the good stuff, let’s break down what car stamp duty actually is. Simply put, stamp duty is a one-off government tax you’ll need to pay when purchasing a vehicle. Think of it as a tax on transferring the ownership of the car to you.
Stamp duty applies to both new and used cars and is typically calculated based on the purchase price or market value of the vehicle, whichever is higher. This means that generally, the more expensive the car, the more you’ll pay in stamp duty. You’ll also find that the cost may vary from state to territory, depending on where you live in Australia.
How Do I Avoid Paying Stamp Duty On a Car or Receive a Concession?
We know what you’re really here for and it’s how to avoid paying stamp duty on a car. While stamp duty is usually unavoidable, there are a few ways to at least reduce the amount you could pay.
Stamp Duty Concessions
Depending on where you live, there may be stamp duty concessions for specific circumstances. For example, Queensland pensioners and people with disabilities may qualify for reduced stamp duty on certain vehicles. However, you’ll need to check your state’s rules to see if you can benefit from a concession.
Trade-In Vehicles
Sometimes, when you trade in an old car for a new one, the stamp duty you pay could be based on the difference between the two cars’ values rather than the full price of the new car. This can significantly reduce the amount of stamp duty you owe which sounds like a win to us!
Green Vehicles
Some states offer lower stamp duty rates for environmentally friendly cars, such as hybrid or electric vehicles. There’s never been a better time to go green and reduce your carbon footprint.
How Much Stamp Duty Will I Pay?
We bet that you’re now probably wondering what you’ll actually pay if none of the exemptions apply to you. This depends on a few key factors such as the state you live in, the car’s purchase price or market value, and whether the car is new or used.
Generally, the formula for calculating stamp duty involves multiplying the car’s price by a specific rate. For example, if you’re buying a car in Queensland that costs $30,000 then the stamp duty might be calculated at a rate of 3%, which means you’d pay around $900 in stamp duty. That doesn’t sound so bad, right?
Different states have different rates, so it’s essential that you check the specific rates for your location.
Is There Stamp Duty For Second-Hand Cars?
Yes, stamp duty applies to second-hand cars as well. The good news is that the stamp duty on used vehicles is calculated based on the car’s market value rather than the purchase price. This means you’ll generally pay less stamp duty when buying a second-hand car compared to a brand-new one.
Some buyers think they can avoid stamp duty by purchasing privately or buying out of state but unfortunately, the duty applies regardless of how you buy the car or where it’s from.
If you’re trying to keep your costs down, looking for a second-hand car is a smart move. Not only will you save money on the purchase price, but you’ll likely pay less in stamp duty as well.
How To Calculate Car Stamp Duty
If you’re wondering how to calculate car stamp duty, it’s pretty simple. Most states in Australia use a percentage-based system to determine how much stamp duty is owed.
You can calculate it by first finding out the applicable stamp duty rate for your state. You’ll then need to determine the vehicle’s value. If the car is new, you can use the purchase price. However, if the vehicle is used then you can check its market value.
You’ll then need to fire up your calculator to do the math. Simply multiply the car’s value by the applicable stamp duty rate. For example, if you’re buying a car valued at $25,000 and the rate in your state is 2%, you’d multiply $25,000 by 0.02. This gives you a sum of $500 in stamp duty.
Whether you’re looking for a new or used car, doing your homework ahead of time can help you avoid extra costs and get the best deal possible. Happy car hunting!
This article is an opinion piece and is not intended as a sole source of guidance. It does not take your individual circumstances into account.