Home buying costs

In addition to the actual purchase price of a property, there are many other fees and charges which you should bear in mind.

 

Stamp Duty

This is a tax based on the purchase price of the property, and will generally be your biggest expense. It is payable anywhere from the day of settlement to three months after exchange of contracts, depending on the State or Territory in which you make the purchase. Stamp Duty is paid to the Office of State Revenue. Some first home buyers may be entitled to a concession on Stamp Duty so speak to your solicitor to see if you qualify. The cost of Stamp Duty varies between States and Territories.

 

Registration fees

These are paid to the Land Titles Office when you register any document relating to your property. You will need to talk to your solicitor or the Land Titles Office in the State or Territory in which the property is situated to work out how much these fees will be.

 

Goods & Services Tax (GST)

This tax is not payable on bank charges and fees, or if you're buying an established property. However, if you're buying a new property, GST may apply. GST will apply to many other costs of sale including valuation and inspection, real estate agent fees and auctioneers fees, irrespective of whether it is a new or established property.

 

Mortgage insurance

Most banks and financial institutions that lend you more than their normal lending margins require Lenders' Mortgage Insurance. The Commonwealth Bank requires Lenders' Mortgage Insurance if we lend you more than 80% for non Low Doc loans, or 60% for Low Doc Loans, of the value of the property. The cost of this is added to the loan. Essentially Lenders' Mortgage Insurance gives you the opportunity to purchase a property with a smaller deposit, or if you're eligible for the 'First Home Owners Grant' you may not require any deposit at all.

Lenders' Mortgage Insurance protects the lender (not you, the borrower) should you default and the property is sold for less than the outstanding amount on the loan. You remain liable for any amount owing under the contract, even if the mortgage insurer has paid that amount to the lender.

Even though it is the lender who is the beneficiary, it is you who pays the one off insurance charge. However, if you repay your loan within a two year period, you may be eligible for a partial refund of the Lenders' Mortgage Insurance charge.

 

Capital Gains Tax

If you are looking to buy an investment property, you will need to consider the implications of Capital Gains Tax (CGT) should you ever sell it. Gains made from the sale of investment properties are generally subject to this tax.

The amount of tax will depend upon a number of factors including whether you have lived in the property and the period of time for which you held it. For instance, the purchase and sale of a property within a short period of time may mean any profit you make would be included in your ordinary assessable income and taxed at marginal rates. You should consult with your tax adviser or accountant for details.

 

Calculate your costs

Use our Total Home Buying Costs calculator to help work out exactly how much you'll need to buy your home.

 

Good advice

A Commonwealth Bank Financial Planner can help you reach your goals sooner by taking a look at where you want to be and recommending a customised plan to help you get there. Learn more about how a Commonwealth Bank Financial Planner can help you.

 

Important information

The information on taxation is of a general nature only and is based on the continuation of present taxation laws, rulings and their interpretation. As individual circumstances differ, you should seek assistance from your taxation adviser.