The cost of the property you buy and the additional costs you incur at the time you buy your property, will be attached to your investment forever. In Australia these costs vary considerably between states, so make sure you do your research and know what your costs will be.
The cost of the property and the costs associated with buying your property are the principal determinant for the financial performance of your investment. You will never be able to recover any unnecessary costs you incur at the time of purchase.
Likewise, if you get your sums wrong or get carried away and the cost of the property is simply too high and you pay too much, this will of course harm your investment as well.
As an investor you must ensure you don’t pay too much for your property and be sure that you account for all the costs you’ll incur. This principal applies if you’re investing in Australia property, or anywhere else around the world.
The cost of the property and and the costs you incur when you buy are critical to the performance of your investment.
So let’s assume you have a good understanding of price and have not overpaid for your property. What are the other costs you’ll incur when you buy property in Australia?
In Australia, each state or territory registers title to land on the Torrens principle of Title registration. Each state and territory maintain its own central register of all land in the state, which shows the owner of the land. This title is the official record.
Because these records are maintained at a state and territory level in Australia, each state is responsible for administering its own records and each has different set of charges relating to the transfer of titles. Not only does the cost of property vary significantly, but the costs associated with buying can vary significantly between states, so make sure you do your homework.
Conveyancing Fees
In Australia conveyancers use relatively standard fee structures and their fees are generally charged in three categories:
- A fixed Professional Legal Fee – the cost of the lawyers (or conveyancers time)
- Search Fees – the cost of obtaining legal information for due diligence such as council and utility information; and
- Additional costs – for things outside of the professional and search charges
Because the Australian Title system is computerised and relatively straightforward the costs associated with conveyancing are relatively low.
Estimated conveyancing charges in New South Wales, Queensland and Victoria associated with purchasing off the plan property are set out below. Charges will vary between different states and territories and whether the property is new build or second hand, however but they will not vary significantly.
| Location | Fixed Professional Legal Charge | Standard Searches | Average Total Estimate |
| New South Wales | $750 – $1,000 | $350 – $450 | $1,100 – $1,450 |
| Queensland | $850 – $950 | $200 – $300 | $1,050 – $1,300 |
| Victoria | $600 – $700 | $150 – $220 | $750 – $920 |
Stamp Duty, Registration and Transfer Fees
Stamp duty varies significantly between states and territories and changes significantly depending on whether the purchaser is an investor or a homeowner. For the purposes of this guide, we’ll highlight the Stamp Duty and fees in New South Wales, Queensland and Victoria but you can find details for all the other states in our soon to be published Buyers Guide to Australia.
NEW SOUTH WALES
Transfer Duty
In New South Wales, Stamp Duty is called ‘Transfer Duty’. It is charged when a person or company purchases property (this includes holiday homes, primary residences, and investment properties).
Purchasers must pay the transfer duty within three months of signing a contract for sale or transfer (including off the plan purchases). There is an exemption for off the plan purchases for permanent Australia residents (who have spent more than 200 days in the last 12 months in Australia), Australian citizens and New Zealand citizens who intend to live in the property. They can defer the payment for up 12 months after the agreement to purchase is signed or until the property has been completed, whichever occurs earlier.
| Purchase Price | Rate of Stamp Duty (Transfer Duty) | ||
| $0 | to | $14,000 | 1.25% of the purchase price |
| $14,001 | to | $30,000 | $350 plus 2.4% of every dollar over $14,000 |
| $30,001 | to | $80,000 | $415 plus 1.75% of every dollar over $30,000 |
| $80,001 | to | $300,000 | $1,290 plus 3.5% of every dollar over $80,000 |
| $300,001 | to | $1,000,000 | $8,990 plus 4.5% of every dollar over $300,000 |
| $1,000,001 | to | $3,000,000 | $40,490 plus 5.5% of every dollar over $1,000,000 |
| $3,000,001 | and over | $150,490 plus 7% of every dollar over $3,000,000 |
Foreign Buyer Surcharge
For all purchases after 1 July 2017 foreign buyers are subject to an additional surcharge of 8% of the purchase price.
Mortgage Registration Fee
There is a mortgage registration fee of $143.50 where a mortgage is registered on the Title.
Land Transfer Fee
There is a land transfer fee of $143.50 for each transaction.
Read more on the New South Wales Government website here.
QUEENSLAND
Transfer Duty
In Queensland stamp duty is referred to as Transfer Duty. The costs are as follows:
| Purchase Price | Rate of Stamp Duty (Transfer Duty) | ||
| $0 | to | $5,000 | Zero |
| $5,001 | to | $75,000 | 1.5% of every dollar over $5,000 |
| $75,001 | to | $540,000 | $1,050 plus 3.5% of every dollar over $75,000 |
| $540,001 | to | $1,000,000 | $17,325 plus 4.5% of every dollar over $540,000 |
| $1,000,001 | and over | $38,025 plus 5.75% of every dollar over $1,000,000 |
Foreign Buyer Surcharge
For all purchases after 1 October 2016 foreign buyers are subject to an additional surcharge of 7% of the purchase price
Mortgage Registration Fee
There is a mortgage registration fee of $192.00 where a mortgage is registered on the Title.
Land Transfer Fee
There is a land transfer fee of $192.00 plus an additional fee for lodging a transfer if the consideration is more than $180,000, which is $36.00 for each $10,000 or part or $10,000 more than $180,000.
You can read more on the Queensland government website here.
VICTORIA
Transfer Duty (the stamp duty) rates for properties in Victoria are below:
| Purchase Price | Rate of Stamp Duty (Transfer Duty) | ||
| $0 | to | $25,000 | 1.4% of the purchase price |
| $25,001 | to | $130,000 | $350 plus 2.4% of every dollar over $25,000 |
| $130,001 | to | $960,000 | $2,870 plus 6% of every dollar over $130,000 |
| $960,001 | and over | 5.5% of the purchase price |
Foreign Buyer Surcharge
For all purchases after 1 October 2016 foreign buyers are subject to an additional surcharge of 7% of the purchase price
Mortgage Registration Fee
There is a mortgage registration fee of $119.70 for paper transactions, and $110.80 for electronic transactions.
Land Transfer Fee
There is a land transfer fee which can be either:
- Paper Transaction Fee – $98.50 plus $2.34 for every whole consideration, the maximum fee is $3,609.00
- Electronic Transaction Fee – $89.50 plus $2.34 for every whole consideration, the maximum fee is $3,600.00
Learn more on the Victoria Government website here.
Because the costs associated with purchasing your property can be high, these are an incredibly important consideration for investors, particularly for those purchasing offshore. So before you jump in and buy that property, make sure you’ve done your homework, so you can calculate the performance of your investment accurately.
As an investor, make sure you’re clear on your investment strategy. Read our article, ‘5 investment Strategies you probably haven’t thought about‘ to help you get the best from your next property investment.
