Purchasing a property is a big financial investment, but aside from the actual cost of the property there are many smaller costs that also need to be taken into account when budgeting. Generally, these extra fees and charges can add an extra 4-5% to the original purchase cost, so it is best to know about them before you sign on the dotted line.
Many of the additional costs associated with buying a property are levied on the purchase price, so the more expensive your property, the greater the fees and charges will be.
Stamp Duty
Stamp duty is a tax that is levied on the purchase of a property. The amount of stamp duty charged varies depending on the State or Territory in which you purchased the property, and the value of the property. For example, a property valued at $350,000 will attract stamp duty of $10,075 in Queensland or $11,240 in New South Wales. For more information on stamp duty rates, visit the website for the Revenue Office in your State or Territory or see this calculator.
Stamp duty can also vary depending upon whether you are purchasing your first home in Australia or not, with special concessions available for some first home buyers (like the First Home Owners Grant). It is worth noting that first home owner concessions are not offered to temporary or non-residents of Australia, but may be available to permanent residents.
Land Transfer Charges and Title Search Fees
To ensure that your name is recorded with the relevant Land Titles Office as the new owner, there is a charge payable for Land Transfer registration. This fee varies depending on State or Territory and can be either a flat fee or a proportion of the property value. For example, a property valued at $350,000 will pay $607 in Queensland and $199 in New South Wales.
Title Search Fees are also charged to check ownership of a property prior to purchase. These are generally quite small fees, for example it costs only $11.90 in New South Wales.
Legal Fees
Legal fees will vary depending on whether you use a solicitor or conveyancer, and the amount of work they are required to complete. It is best to negotiate the fee that you will charged before they commence the work for you.
Mortgage Fees
If you are taking out a mortgage on the property there are some legal fees that are charged on registering the Mortgage as a legal document. These include Mortgage Registration fees and Stamp Duty. The cost varies depending upon the value of the mortgage and the State or Territory in which the mortgage is registered. For a $250,000 mortgage in Queensland you will pay $152 to register the mortgage but no stamp duty is levied. For a mortgage of the same value in New South Wales the mortgage registration fee would be $102 and stamp duty payable of $941 (however this will be abolished in July 2013).
Other Costs
When you least expect it other costs always arise. Some that you can keep in mind when purchasing and moving into a new home include electricity, water, gas and phone connection fees. There are also likely to be costs associated with moving, such as removalist fees. If you are shipping furniture from overseas you may also have some additional costs before clearing customs, particularly for items that need to be treated before entering Australia, such as wood.
There are so many costs associated with moving and setting up a home, and it is worthwhile making sure you have a little money spare to cover the unexpected at this exciting time.
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