May 21st, 2025

Stamp Duty Tax Treatment: Investment vs Owner-Occupied Properties

Stamp Duty Overview

Stamp Duty: Understanding Its Tax Impact in Australia

Stamp duty can represent a significant upfront expense for property buyers in Australia. However, its treatment for tax purposes largely depends on whether the property is an investment or your primary residence. Knowing these differences is essential for effective tax planning and ensuring compliance with Australian Taxation Office (ATO) regulations.

Investment Properties

When stamp duty is paid on an investment property, it is not immediately deductible. Instead, the ATO treats the stamp duty as a capital cost which is added to the property’s cost base. This adjustment doesn’t provide an immediate tax benefit but can reduce the capital gains tax (CGT) liability when the property is eventually sold.

For example, consider buying an investment property for $700,000 with an additional $20,000 in stamp duty. That $20,000 is added to your cost base; if the property sells later for $900,000, you'll calculate the CGT on $180,000 rather than the full $200,000 difference.

Stamp Duty on Investment Properties

Owner-Occupied Properties

For properties that serve as your primary residence, stamp duty does not offer any tax deductions. Since primary residences are generally exempt from CGT, the stamp duty paid is neither deductible in the current year nor eligible to be added to the property’s cost base.

Stamp Duty on Owner-Occupied Properties

Mixed Use and Apportionment

In cases where a property is used partly for investment and partly as a personal residence, the stamp duty must be appropriately apportioned. Only the portion related to the investment can be included in your CGT calculations.

Depreciation Guide

Discover the #1 tax secret wealthy Australian property investors use to grow their portfolios faster — even in a high interest rate environment.

  • Learn how to turn wear and tear into wealth
  • See real examples of $15,000+ first-year deductions
  • Understand how to structure your purchases for maximum after-tax ROI

Download Your Free Wealth Building Guide

This ebook reveals how to legally slash your tax bill while building long-term wealth through property. Learn the strategies savvy investors use to gain an edge — even before settlement.

  • Maximise tax deductions and improve cash flow
  • Understand Division 40 vs 43 and how to claim both
  • Position yourself to reinvest and scale faster
Free Instant Access

Key Points to Remember

  • Stamp duty is not an annual tax deduction.
  • For investment properties, it provides a future CGT benefit.
  • For primary residences, there is no associated tax benefit.
  • Mixed-use properties require proper apportionment of stamp duty expenses.

For any property purchase, it’s wise to consult with a tax advisor or accountant. This ensures you track expenses correctly, retain receipts, and understand the long-term implications of these capital costs.

For more details and strategic advice on tax and property investment planning, please visit our guide on Tax and Investment Property Planning.

You may also like

Related posts

How a Co-Living Investment Should Work: The Winter Valley Blueprint

The Winter Valley Blueprint: Rethinking Co-Living Investments Co-living has emerged as a transformative approach to residential investing, combining attractive yields with purpose-driven design and straightforward operations. When structured effectively, these assets yield impressive rental returns, significant depreciation advantages, and steady cash flow. Below is a reimagined model of an ideal...

May 2nd, 2025
1 month ago
How Renting Out Your Home or a Room Affects Your Tax: Income, Deductions & CGT Explained

Maximizing Rental Income: Tax Considerations, Deductions, and CGT Insight Renting out a spare room—or even your entire home on occasion—can be an excellent way to supplement your income. However, it’s vital to be aware of the tax implications, including the income you must declare, the deductible expenses available to you,...

May 9th, 2025
1 month ago
Claiming Lenders Mortgage Insurance (LMI) as a Tax Deduction for Investment Properties in Australia (2025 Guide)

Understanding Lenders Mortgage Insurance in Australia In Australia, Lenders Mortgage Insurance (LMI) is a one-off premium typically required when borrowing over 80% of a property's value. When it comes to investment properties, LMI may be tax-deductible as a borrowing expense if you meet specific criteria. Tax Deduction Eligibility The Australian...

May 16th, 2025
4 weeks ago
Straightforward process

Ready to take control of your financial future?

01
Discovery Q&A:

We begin with a personalized discovery Q&A to understand your goals, risk tolerance, and financial situation.

02
Custom Strategy:

Based on your needs, we craft a strategic investment or financial plan tailored just for you.

03
Ongoing Support:

We help you track progress, optimize decisions, and adjust your plan as your life and markets evolve.

04
Financial Freedom:

With a clear roadmap and expert guidance, you move confidently toward long-term wealth and peace of mind.

28+ Years guiding investors
Plan Your Investment Strategy

Understand your goals and build a tailored strategy—whether you're focused on cashflow, capital growth, or long-term wealth creation.

Access the Right Opportunities

Explore high-growth areas, new builds, house & land packages, or SMSF-ready properties matched to your financial profile.

Build Long-Term Wealth

Leverage tax advantages, depreciation, and smart lending strategies to maximise returns and grow your portfolio sustainably.

Start Your Investment Journey

Smart Property Investing Starts Here

Whether you're a first-time investor or growing your portfolio, we provide the guidance, tools, and insights you need to make informed decisions and secure high-performing properties. Let us help you turn property into prosperity.