What is a 'Stamp Duty'
A stamp duty is the tax placed on legal documents usually in the transfer of assets or property. This duty is customary in the Commonwealth of Nation countries including Singapore and Australia and certain states in the United States. Where enforced, this tax is placed on the transfer of homes, buildings, copyrights, land, patents and securities. The transfer of documents in locations where this law exists, is only legally enforceable once they are stamped, which shows the amount of tax paid. Also referred to as stamp tax.
BREAKING DOWN 'Stamp Duty'
Historical background indicates that stamp duty was initiated when the Stamp Act of the British Parliament was passed in 1765. The tax was imposed on American colonists who were required to pay tax on all printed paper, for example licenses, newspapers, a ship's papers or legal documents. At the time, funds collected from stamp duties were used to pay for positioning troops in certain locations of America.