Costs Involved In Buying Australian Property

Queensland-based accountancy firm Hanrick Curran lists the following costs to take into account when buying an investment property in Australia:

1. Stamp (transfer) Duty

On the purchase of a property, buyers are required to pay stamp duty, which is levied by each state or territory. The rates of stamp duty vary between states and territories and apply on a sliding scale according to the value of a property. The amount of stamp duty payable by foreign buyers can be different to the rate paid by Australian residents, with the top rate of stamp duty around 7% for international buyers. In some states, additional stamp duty may also apply when placing a security (mortgage) over properties. Exact rates of stamp duty can be found on the various Office of State Revenue (OSR) websites.

2. Other Government Purchase Duties

Depending upon the location of the property, other minor government fees may apply to the purchase of the property.

3. Goods & services tax (GST)

Australia has a GST (value added tax) regime which applies to most business transactions at the rate of 10%. If the vendor is registered for GST and is selling new residential property, or any non-residential property, then GST will usually apply to the transaction and is usually quoted as part of the final purchase price. If a purchaser is acquiring a nonresidential property as an investment and the rental income will exceed $75,000 per annum, then the purchaser will be required to register under the GST regime and charge GST on the rental income and remit this to the government on a regular basis.

4. Land Tax

Most state governments charge ‘land tax’ on an annual basis. This is a tax based on the market value of the land and applies where the value of all land held by a particular tax payer exceeds a certain threshold. Again, being a state-based tax, the thresholds and rates of tax vary but, on average, land tax applies above an average threshold of around $300,000 and at average rates of between 1 and 2% of a revaluation of the land (as determined by government valuers).

5. Local Government – Council Rates

Local governments are split into ‘council areas’. Local council’s main source of revenue is levying ‘council rates’ to property owners. These ‘rates’ are designed to compensate council for the provision of basic services such as the provision of sewerage, waste management, etc. In most cases, these are levied on a quarterly basis and are based again on the value of the land.