News And Views
PROPERTY TAXES TAKE A CUT (May 2008)
Reductions in stamp duty and land tax in the recent State Budget will benefit all home buyers, particularly first home buyers and small businesses. Stamp Duty: For the first time in ten years the thresholds have been lifted by 10 per cent. Based on a median priced home in Melbourne this will save a buyer around $750. First Home Buyers: Victoria's first home buyers are big winners, with a stamp duty cut of almost 17 per cent - worth $2460 on the median first home - on top of existing first home buyers' assistance worth up to $12,000. On top of that, an additional $3000 bonus will be available to first home buyers buying a new home in regional Victoria. Land Tax: All land tax payers in Victoria will benefit from a reduction in the top land tax rate and changes to land tax thresholds for land tax payments from the start of 2009. The top land tax rate will be reduced by 10 per cent from 2.5 to 2.25 per cent. This is down from 5 per cent in 1999 and will help make Victoria a more competitive place to do business. In addition, land tax thresholds will increase by 10 per cent to relieve the pressure on land owners.
INCIDENTAL COSTS OF PROPERTY PURCHASE
Most people know that the cost of buying a property is more than the amount they pay to the real estate agent. But how much more? Individual contracts of sale can vary and level of borrowing affects cost, but most advisers say that prospective purchasers should budget to add around five percent to the purchase price of the property for the various fees and expenses. Where does that money go?Regulations vary from state to state and country to country but the possible costs include· mortgage application fee· solicitor’s conveyancing fees (plus disbursements including title searches, survey identification report, strata title report, (if needed) registration fees, inquiry and certificate fees charged by government authorities and administrative costs such as photocopying and phone calls · stamp duty on purchase price (sliding scale)· stamp duty on mortgage· valuation fee (may be charged by your lender)· mortgage insurance (may apply)· building inspection and pest inspections· It is possible to shop around and reduce some of the costs. Some people use a Do-It-Yourself Conveyancing Kit, but of course this can be time-consuming for the novice. Don’t forget that buyers who can afford to put down a reasonable deposit will have lower interest repayments as well as possibly saving on mortgage insurance.