Is stamp duty tax deductible?

The short answer, by what the duty was on

Stamp duty on buying a rental goes into its cost base, where it cuts your capital gains tax when you sell. The exception is the ACT, where the ATO treats it as a lease cost you deduct in the year you buy. The calculator above shows what the duty is worth in tax, and when.

Why it goes into the cost base

Transfer duty is part of what it costs to acquire the property, and acquisition costs are capital, which section 8-1 keeps out of deductions. The ATO lists it among the costs you cannot claim against rent. Instead the Act names it as an incidental cost, the second element of the cost base. The ATO’s own example has a couple who pay $170,000 for a rental, $350 to a surveyor and $750 in duty, and finish with a cost base of $171,100. The duty never appears on a tax return until the year the property is sold, and then it shrinks the gain.

What it is worth when you sell

Because the 50% discount halves the gain after the duty has come off it, duty in the cost base shields only half of itself from tax. For the opening example, a $750,000 NSW rental sold for $950,000 by someone earning $120,000, the $27,937 of duty saves $6,565 of capital gains tax: 23.5% of what was paid, collected years after it was spent. Here is the same purchase in every state.

The ACT exception

You cannot buy freehold land in the ACT; homes are held under 99-year Crown leases. That turns the duty into a duty on a lease, and the ATO’s Rental properties 2026 guide is explicit: stamp duty, preparation and registration costs “you incur on the lease of an ACT property are deductible to the extent that you use the property as a rental property.” The same guide lists duty on the transfer of a property among the costs you cannot claim, then carves out duty on a lease from that list.

Two things follow. The deduction comes in the year you pay the duty, at your full marginal rate, rather than at half strength years later; on the opening figures $22,200 of ACT duty saves $7,104 straight away, 32.0% of it. And because the amount has been deducted, section 110-45(1B) keeps it out of the cost base, so it does not count twice at sale. A home lived in for part of the time is apportioned. This is the ATO’s published guidance rather than a ruling, which is why the page names it as theirs.

Duty on the loan, and on a lease

Duty on a mortgage, where one is charged, is a borrowing expense, which the ATO lets you claim over five years or the term of the loan, whichever is shorter, starting from the day you borrow. If all your borrowing expenses come to $100 or less they are claimed at once, and repaying the loan early brings the rest forward. Duty on a lease you sign over a rental property, separate from the ACT case, is deductible in the year you pay it.

Your own home

Duty on a home you live in is capital and private, so it is never deductible, and while the home is fully exempt from capital gains tax it never counts for anything. The ATO still asks you to keep the record, because a home can stop being fully exempt: use part of it for business, or move out and rent it for longer than the six-year rule allows. Even then the duty may not help, because a home first rented out after you lived in it is often treated as bought again that day at market value.

A business, or its premises

Duty on buying business land or premises is part of the cost of the land, and the ATO’s ruling TR 2011/6 says so in terms. It is not deductible, and it does not qualify for the five-year write-off of business capital costs, because that section excludes anything that can be counted in a capital gain. Duty on a depreciating asset, such as equipment bought with a business, counts in the asset’s cost and is depreciated with it. A car used for work is the common case: on the ATO’s general rule for depreciating assets the duty is part of its cost, which the car cost limit then caps.

What changes in 2027

On our reading of the Act as passed, transfer duty still goes into the cost base: the rule that strips denied deductions from the cost base only touches amounts that could have been deducted, and transfer duty never could. What changes is its value. For an individual’s sale from 1 July 2027 the 50% discount ends, except for new dwellings and affordable housing, and the cost base is indexed for inflation instead, duty included. A property held on 30 June 2027 is treated as sold and bought back that day, and duty paid before then belongs to that first deemed sale. Mortgage duty, lease duty and land tax are costs of holding a rental, so on our reading they fall inside the new limit on losses for an established home bought after Budget night, from the 2027–28 year. That includes the ACT duty on buying such a home: incurred in 2026–27 it stays outside the limit, but incurred from 2027–28 it falls inside. The 2027 changes page sets out what the Act says.

The same arithmetic, applied to everything else you pay at settlement, is on the conveyancing fees page: legal fees and searches on a rental follow the duty into the cost base.