When you buy a property in Australia there are numerous acquisition costs that need to be paid by the purchaser on or prior to settlement of the property including solicitor fees, government charges, Lenders Mortgage Insurance ("LMI") and of course stamp duty. A lot of lenders no longer charge an upfront establishment fee and instead will charge an annual fee now days.
If we use an example property purchase for a $500,000 house and land package in Queensland as a property investor you would be required to pay the following acquisition costs:
Stamp duty $7,175
Transfer fee $138
Government registration fee $419
New mortgage fee $181
Settlement fee $250
Solicitor/Conveyance fees $1,500
Lenders Mortgage Insurance $10,400 on 90% lend
Based on this example total acquisition costs would be $20,063 assuming a 90% lend including LMI. You would also be required to contribute 10% of the purchase price being a further $50,000 making a total equity contribution of $70,063.
Acquisition costs represent 4.0% of the purchase price in this example.
However, for first home buyers, many states & territories have government grants that can actually exclude you from paying part or (in some cases) all of the stamp duty on your first purchase.
In Victoria some unit developers are offering incentives whereby they are offering to pay the stamp duty for purchasers on settlement. Remember stamp duty in Victoria prior to 30 June 2017 was calculated on the land value only so if you bought off the plan prior to construction commencing you paid almost no stamp duty as the land component was a very small portion of the purchase price. This is a big saving if you can get this kind of incentive.
Existing properties you will always have to pay stamp duty on the total purchase price.
But what about house and land? Well you still have to pay it on the land component only. Nothing has changed here.
But what if you didn't have to pay stamp duty on the land component? What? How?
If you were to purchase a house and land package with zero stamp duty, your total acquisition costs of $12,888 would represent 2.6% of the purchase price requiring a total equity contribution of $62,888. That would certainly help.
Ask us how.
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