Stamp duty on Loan Increase

Hello All,

Can someone provide an expert opinion whether a stamp duty is payable on loan increase? I just requested an increase of $25K on my exisiting home loan and the lender has advised that I will be paying the LMI and also the Stamp duty. I am fine with the LMI which is around $700 but the real problem is the stamp duty.. any idea what rate % of stamp duty will be in VIC? I just want to be an educated consumer to ensure I didn't get ripped off ..

Many thanks

 

No - you don't pay stamp duty on a residential loan.

Yes - you may pay LMI on a loan increase if borrowing above 80% of the properties value.

Cheers

Jamie

 

Many thanks Jamie.

 

That's why get a broker moving forward. I would even get a broker now for your small release to make sure the bank don't stuff you up.

 

There's definitely no stamp duty on a loan increase in VIC. There once was in NSW under certain circumstances, but there's a form that can be signed which effectively gets this waived. I think even this has been dropped in the last few years.

 

Duty on loans was totally abolished in NSW last July I think. Before that is used to apply for LOC loans and loans for companies borrowing.

 

I see loan increase and i'm thinking refinance on existing loans to buy now home.

My question is, if i pump up my investment only home loan to pay for new home purchase, would the new home purchase (to live in) be subjected to Stamp Duty?

 

See my post above.

 

I think the stamp duty the banker is referring to may be referring to is the stamp duty applied to when calculating lmi premium.

e.g $2000 *1.1%

 

There is a small duty on LMI (I think this was abolished in NSW state budget too though). Not sure about VIC.

 

I see your post but i can't understand it w.r.t my situation which is use investment equity/fund to borrow to buy new home to live in. Basically refinancing my investment.

 

What stamp duty are you talking about? Duty on mortgages was abolished in NSW.

 

Stamp duty payable on buying a house. I'm not first homer buyer. I just did a quick google:

"Buyers purchasing a residence that they intend to occupy as their home or purchasing a property intended to be their first home, may be eligible for the concessions. For example, New South Wales offers stamp duty concessions for first-time buyers on new homes; full exemption for a home valued up to $550,000 and concessional rates for new homes valued between $550,000 and $650,000."

So exemption does not apply to me cos the house is more than $650,000?

 

stamp duty on the transfer of land? Have you bought the house or not?
Loans are irrelevant for stamp duty purposes.

I don't deal with first home owners much so don't know about the exemptions, but if you are not a first home owner there probably aren't any.

 

1) Investment house - owe zero, have redraw available of $500,000
2) Residential house - sell 1M, owe zero.
3) New home - 1.5M, to live in (not investment)

Refinance 1, pump up to owe $500,000. So effectively new home is purchased and oweing bank $500,000 but the mortgage is on the investment not new home.

Is there Stamp duty on my my new home?

 

Loans are irrelevant for duty purposes.
Yes there will be stamp duty if you are transferring land, as per normal.

BTW the interest on the investment loan won't be deductible.

 

Stamp duty for property is based on the purchase transaction of the asset - not to do with the loan.

The only time these days you will see anything 'stamp duty' related with regards to a resi loan these days is only a charge paid on the LMI which is a fraction of the cost of LMI and is like how you see government charges on other types of insurance.

Terry has identified the big issue with your scenario unrelated to stamps. The ATO looks at the purpose of the funds, not what the debt is attached to. You'd likely be better off borrowing for the purchase as this will be coded as a resi loan for your next purchase and leaving the investment property be. You can otherwise potentially use some strategies to re-gear your investment property and deleverage the proposed new PPOR purchase.

 

"transferring" i'm selling one and buying another.

Thank you. So regardless of buying to live in or as investment (not First Home buyer, Property over 1M for arguments sakes) Stamp Duty is treated on each and every purchases? Eg. Buy 10 Properties, pay 10 lots of Stamp Duty individually and separately.

 

Pretty much - its just a tax a buyer pays to the state govt when purchasing property.
Different states have different amounts and different exemptions - depending on what the govt is trying to incentivise/disincentives.

 

stamp duty is levied on dutiable transactions. The transfer of land is a dutiable transaction, but there are limited exemptions in place, generally only for first home owners (and change of trustees in some cases, and marital splits, or transfers between spouses).

if you buy property there will be stamp duty payable. if you buy 10 that is 10 lots of duty. The stamp duty on a $1.5mil purchase is likely to be more than your annual salary, so I hope you didn't think it was going to be exempt.