Understanding the dutiable value of a property
How dutiable value is determined and what it includes.
Key information
When you buy or acquire a property, you pay land transfer duty on the dutiable value of the transaction.
Dutiable value is the greater of the:
- price you paid for the property, or
- market value of the property.
When the transaction involves unrelated parties dealing with each other independently, we treat the price paid as the market value.
If the transaction does not reflect market value, such as transactions between related parties, we may require evidence of market value.
Calculate your land transfer duty
Price paid
The price paid for a property is normally a sum of money. But sometimes other means are used or included, such as:
- providing objects, such as a car or valuables
- assuming a liability
- a promise to pay an amount of money
- a guarantee
- an exchange of property
- performing an obligation
- covenants given by a lessee to a lessor under the terms of a lease.
The price paid includes:
- GST payable on the transaction
- late settlement interest, if it applies, including interest paid after a failed settlement that later completes.
Market value
The market value of a property is the price it may reasonably sell for on the open market, free from encumbrances.
In valuing a property, we do not take encumbrances into account, such as a mortgage.
Read more about valuations of land for duty purposes.
Example
Tim buys Rose Cottage for $700,000. The property is subject to an existing mortgage of $200,000.
The encumbered value of the property is $500,000, which is $700,000 less $200,000.
The unencumbered value is $700,000.
Valuations required for related parties
When unrelated parties deal with each other independently, they are commonly described as trading at arm’s length. In these circumstances, we assume that the amount paid for a dutiable transaction is the market value.
If your transaction involves related parties, you need to declare the market value of the property supported with an independent valuation.
Related parties include:
- relatives
- related companies
- parties in an employment relationship
- parties acting together in some way.
Even where parties trade at arm’s length, we may request a valuation if the business and land acquired is $1 million or more. See Revenue Ruling DA-029.
Calculating duty
We use the dutiable value of a property to calculate duty by applying the relevant land transfer duty rates.
There are different rates if the property is your principal place of residence (PPR) or not your PPR.
You can use the land transfer duty calculator to estimate the duty you need to pay.
Calculate your land transfer duty
Special rules for calculating dutiable value
Some transactions have special rules that affect how we calculate dutiable value.
These include: