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By Harvey
Grennan, The Sydney Morning Herald
Traditionally,
the main cost of buying a home - apart from the sale price - was
the stamp duty payable to the State Government on the purchase of
a dwelling or vacant land.
While it is still a major cost, changes
that came into effect on July 1, 2004 mean that first home buyers
may be exempt from this tax.
The accompanying table
provides an explanation of the changes but basically, first home
buyers are exempt from paying stamp duty on homes valued up to $500,000.
In addition,
for first-home buyers there is a $7 000 grant on new and established
houses and units as part of the GST compensation measures.
Legal expenses for buying
a typical house are your solicitor's fee (negotiable, but say $500-$2,000),
survey and building certificate if required and not provided by
the vendor ($450), disbursements for documents ($300 plus $50 if
a unit) and building inspection and pest report ($400-$500). These
are average figures.
If you are borrowing
money, there will be the loan application fee ($600, sometimes waived),
stamp duty on the mortgage (0.4 per cent above $16,000), other mortgage
costs ($400) and mortgage insurance (1 per cent of the price payable
once only) if you're borrowing more than 75-80 per cent of the valuation.
The other major cost
of moving house is the removalist. The average cost for a professional
removalist moving a 3-4 bedroom home within Sydney including packing
is about $1,500, plus 1 per cent of the value of the contents for
insurance.
A move from Sydney to
Melbourne or Brisbane would cost about $2,200 and to Perth up to
$4,000, plus 2 per cent insurance. There are cheaper small operators,
but they may not be able to help you in busy periods.
Finally there are minor
costs such as the connection of power and phone, adjustment of council
and water rates, insurance and re-direction of mail. And will the
old furniture suit the new house?
All these costs also
attract GST of 10 per cent except for financial services (loans)
and property rates.
STAMP DUTY CHANGES
Since July 1, 2004 there have been changes to stamp duty legislation. Homes valued up to $500,000 are duty-free for first home buyers. Discounts on duty are available on homes valued between $500,000 and $600,000.
First home buyers purchasing a vacant block of residential land will pay no duty on land valued up to $300,000. Discounts on duty are available on vacant land valued between $300,000-$400,000. The new exemptions and discounts apply equally to first home buyers anywhere in NSW.
To calculate the stamp duty payable on a home between $500,000 and $600,000, multiply the purchase price by 0.2249 and subtract $112,450. Here are some examples:
| Purchase
Price |
Usual
Duty |
First
Home Buyers Duty |
Savings
|
| $450,000
|
$15,740
|
0
|
$15,740
|
| $550,000
|
$20,240
|
$11,245
|
$8,995
|
| $590,000
|
$22,040
|
$20,241
|
$1,799
|
| $600,000
|
$22,490
|
no
discount |
0
|
|
|
|
