As well as paying the price tag for a property, there are a few other costs you’ll need to factor into your budget.
Here are the main ones:
Stamp duty is unfortunately a necessary tax levied on all properties by the NSW Government. For an investment property, you may have to pay a bit more than if it’s your home and it’s important you keep a record of this for when you eventually come to sell the property.
Stamp duty in NSW does vary according to the cost of the property and the NSW Government Revenue website, www.revenue.nsw.gov.au, has an online calculator to estimate how much you are likely to pay.
(By the way, this tax is called stamp duty because originally legal documents such as land transactions and marriage licences would be physically stamped to show the tax had been paid and the document was legal.)
Conveyancing and legal fees
The process of transferring the property from the seller to the buyer can be a complex one and while it is possible to do the process yourself, it’s advisable to pay a solicitor or conveyancer to do this for you. They will check on a wide variety of aspects, prepare paperwork and negotiate other costs such as outstanding strata and council payments.
The cost of this service does vary depending on the service provider so you should get a written estimate of the likely costs before signing on the dotted line.
During the process of transferring the property from the seller to the buyer, the conveyancer or solicitor needs to carry out a number of searches to ensure the property is what it says it is and there are no issues such as registered encumbrances or illegal extensions.
Pest and building reports
Having pest and building inspections are not essential when applying for finances however, these inspections will help you know what you’re buying and may help with negotiating on the property price.
First-time buyers keen to get on the property ladder by buying an investment property before their own residential property may be eligible to some of the First Time Homebuyer benefits offered by the NSW Government. These include free stamp duty for a property priced up to a certain amount, and a $10,000 grant if the property is brand new.
However, conditions do apply so check the details on the NSW Government Revenue website.
Don’t let extra finances put you off from starting out on your property investment journey. Speak to your mortgage broker or financial expert and they can explain fully the costs and risks involved. You may find they can factor these costs into the mortgage so you won’t have to pay them directly in one go.
We’ve been helping people realise their financial dreams through property for over 40 years and we’re always looking at ways to help. If you’d like to know more about buying costs and our property management services, our talented and experienced team would love to share its knowledge with you.
Give us a call on 02 4954 8833, send us an email to email@example.com or pop into our Cardiff office for an informal chat.
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