The answer to this question is NO. The purchase of a house is considered the largest transaction that most people will make. Stamp duty is the charges on the transfer of property. It is imposed on the value of the property that is changing hands and payable by the purchaser. For example, when you are selling a property, you do not need to pay these charges. However, there are other costs you should always consider. If you are looking the advice on the selling and buying process, contact Manny Singh, Real Estate Agent in Narre Warren.
In this blog, you will read the things that you need to know about charges in the process of buying and selling.
What is Stamp Duty?
A state government imposes a tax on property transactions and this tax is known as stamp duty and land transfer duty in some states of Australia. However, the purchaser pays for the property. Charges may vary as per the factors below:
- Your location in Australia (where you live).
- It depends upon the type of property you are buying, i.e., a primary residence or investment property.
- It depends if you are a first home buyer or not.
- Type of home you are purchasing; if it is an established home, new home or vacant land.
- Whether you are categorized as a foreigner purchaser.
When is Stamp Duty Paid?
It is an upfront cost which is paid while making the purchase of a property. Hence, it cannot be added to your home loan.
Buyers will have to pay duty to the relevant state revenue office within 30 days of settlement. Typically, this is done by your conveyancer or solicitor.
Have you ever thought about the other upfront costs that come with buying a property?
We will tell you a few other cost factors to consider before buying a home.
If you are preparing to buy your first home or next property, people do focus on saving for their deposit and forget to think about the other upfront costs. Beyond the deposit, there are other things to points into your budget such as tax, any grants you may be eligible for, legal and bank fees, building inspections and lenders mortgage insurance (LMI).
Check out guides that can help you before buying your first home or next property:
The major upfront cost you will pay is the deposit. A lender generally wants you to pay a deposit of 20%. While signing and exchanging contracts on purchase day, you will pay 10% upfront to the property dealer. However, remainder needs to be given on settlement day.
What Are the Charges for Pest and Building Inspections?
The building and pest inspection is crucial to inspect once you find a property in which you are interested. It involves approximately$300–$600. While it is fine to avoid these checks, if you are not sure whether you will win the property on auction day. Whereas, this upfront cost is more reasonable than dealing with large repairs you were not aware of before buying. If you live in Melbourne and are looking for property then contact Manny Singh, Real Estate Agent in Pakenham. You will get guidance in every step.
What Legal/Conveyancing Fees Do I Need to Pay?
A lawyer or licensed conveyancer will take care of tasks such as checking the contract of sale, the title of your land, calculating rates and taxes, and communicating with your lender. This is because your property settlement will take time. These fees can be in the slab from the hundreds to the thousands and may have variations. It depends on who you choose to use and the complexity of your purchase.
Should I Consider Bank Fees?
To get an accurate answer, it is good to ask your lender about how much to anticipate when applying for your home loan. Fees you may include:
- Set-up or upfront fees. (Establishment Fees)
- Service or administration fees, also known as ongoing fees.
- Charges to make changes in your mortgage, such as early exit fees, refinancing fees.
Lenders Mortgage Insurance (LMI) Charges That You Need to Know
While buying a home with a deposit that’s 20% of the property purchase price. Then, lenders will usually charge the lenders mortgage insurance (LMI). In most cases this cost will be added into your home loan. But it’s still important to have information and include it in your long-term budgeting.
Cost of Moving and Repairing
Finally, don’t forget to factor in the cost of moving into your new home. This includes removal, utility or service connections and any repairs to essentials like plumbing, heating or cooling.
Time Duration to Pay These Upfront Costs
These fees depend on your location.
- Pest and building inspections charges are paid ideally before purchase day.
- You have to pay a 10% deposit on purchase day, when you sign and exchange contracts.
- Stamp duty payment is made at or soon after settlement.
- Soon after settlement, legal fees are paid.
- When the loan is set up at settlement, Bank fees, establishment fees and LMI are submitted.
- You need to submit moving and repair costs at or after settlement.
Who Pays the Stamp Duty?
It depends on the state or territory you are living in or buying property. So, some buyers may be eligible for its concession or an exemption.
For example, if you buy your first home you might get an exemption. The current Victorian policy says that if this property is your main residence and you live on it for at least a year. Then you will pay no stamp duty when you buy a property for $600,000 or less. There will be a reduction in stamp duty on a sliding scale, if the price of your property increases above this amount.
Cost that Seller has to Pay
While selling the property you may not have to pay stamp duty. However, there are others that sellers need to pay which depends on circumstances. These costs can include:
- Real estate agent fees, bonus and cost of marketing and advertising.
- Legal or conveyancing fees.
- Capital Gains Tax (if the property is not your principal place of residence).
- Moving costs.
There are various transactions which are required to consider before making a purchase of a house. It is mandatory to know by the buyer about hidden or upfront cost. This is because the real estate industry is evolving so to avoid common mistakes while selling or buying homes. When you buy and sell property, then it is good to have an expert by your side. You have no idea how much burden a realtor can remove. Contact Manny Singh, Real Estate Agent in Narre Warren, who will help you with every purchase or sale.