Be a savvy seller by understanding your property selling costs and how stamp duty works
So, you’ve decided to sell your house, but what costs are you looking at? And do you need to worry about stamp duty?
It’s often confused, but stamp duty is a tax imposed by the state government for the purchase of a property, not the sale. So, it’s the buyer who pays the stamp duty on the transaction. However, it doesn’t mean you’re completely unaffected as a seller. Because it’s one of the largest costs buyers face when purchasing property, it can impact the amount of money they are willing to pay. The cost for stamp duty varies from state to state and is generally calculated as a percentage of the property sale price.
There are 4 main costs for selling a house that will directly affect you – and you should factor these into your sales costs so you have a rough idea how to set your asking price and what your actual profit will be:
1. Agent Commissions
Real estate commissions take one of the largest chunks out of your profit margin when selling your house. They vary between 1.6 and 4 percent of your property sale price and are generally set by individual agents and sellers. Commissions are driven by the state of local housing markets and tend to be lower in competitive markets where there are more agents competing for your property.
2. Legal Fees
Because selling a house is a legal process, there are legal documents that need to be lodged and procedures to follow. A conveyancer or property solicitor will manage your documentation (including Section 32 and Contract of Sale) to make sure there are no complications and that your legal interests are being protected.
Legal fees vary considerably between practitioners, so it’s not a bad idea to get a few quotes before hiring. Fees can vary from $600 to as much as $1500, with the depth of knowledge and level of service equally variant.
3. Capital Gains Tax
CGT is only applicable when you sell an investment property, not your primary place of residence. A capital gain or loss is the difference between what it cost you to purchase and improve your property and the amount you receive when you sell it.
If you sell your property within 12 months of the date of purchase, you’ll pay the full capital gain. But you can get a 50% discount on your capital gain (after applying capital losses) if you sell after 12 months of ownership.
4. Property repairs and renovations
Obviously as a seller, you have a vested interest in making your house as appealing as possible to buyers. There may be practical repairs you need to take care of such as fixing a garage door or fence. Then you could choose to do some cosmetic touches such as hiring display furniture or giving your interior a fresh coat of paint to boost appearance.
At PropertyNow, we can save you thousands off the costs of selling your house. Talk to our team today on 1300 664 773 to find out more.