There are significant property costs and these include stamp duty and legal fees. Once the property has been transferred into your name, you should also consider the following additional property costs:
- You will be responsible for any damage to the property. Consider taking out building and contents insurance to cover you for any loss or damage to the property. Ideally, you should obtain insurance cover from the time Contracts are exchanged. This is because you have a legal interest in the property from the time of exchange and you should protect this with insurance.
- Capital Gains Tax (CGT): Generally speaking the sole or principal place of residence will be exempt from CGT. However, if the property is an investment property, CGT will be an issue when you go to sell the property. Before you sell the property, check any CGT implications with your accountant.
- Land Tax: Again, your principal place of residence is exempt from Land Tax. However, land tax may be applicable if the property is an investment property and its land value as determined by the Valuer General (this is different from market value) is above the land tax threshold. The land tax threshold for the 2011 land tax year is $387,000. Check any land tax implications with your accountant. Your solicitor can check the current land value of the property to help determine what your land tax liability may be.
- Council rates, water, electricity and gas: The owner of a property is responsible for paying these amounts. If you rent out the property, you usually pay Council and water rates and the tenants pay for the electricity and gas.
- Property Manager: If the property is to be used as an investment, consider engaging a property manager. They will save you time in finding and selecting suitable tenants, collecting the rent and managing the property. They usually charge a letting fee and then a separate ongoing management fee based on a percentage of the rent.
- Repairs and Maintenance: It is difficult to estimate these in advance but you should have money set aside to provide for any contingency. If the property is an investment property and you are using a property manager, they will engage suitable Contractors and mange the expenses for you. However, you should always get a quote for the work and check any invoices paid.
- Strata Levies: If you have bought a strata property, you will need to pay the quarterly strata levies. You should already know how much these are before buying the property but bear in mind that they are likely to increase at least once a year. The strata levies cover the cost of repairs and maintenance to any common property. In some cases a special levy may be struck to cover the cost of additional capital repairs to the common property. If you rent out the property, you will still be responsible to pay for the strata levies rather than the tenant.
Before you buy a property, speak to a good property buyers agent so that you have a better idea of all the different property costs and how to save money.
Buyers Domain property buyers agents are leading buyers agents in Sydney and will help you to find a property quicker and with less stress.
Call Buyers Domain property buyers agents today!