When considering buying property in Australia, you will need to be aware of the standard practices and costs involved in your purchase. Below is an overview of the buying procedure in Australia.
Foreign investors are permitted to own property in Australia provided the land or property for sale has been approved for sale to overseas buyers by the Foreign Investment Review Board. Check out their website for details of how to apply: - http://www.firb.gov.au/.
The buying property in Australia is relatively straightforward and follows a similar pattern to the UK in terms of home ownership.
There are two methods of buying property in Australia:
When buying at auction you will need a 10% deposit available on the day of auction. Should your bidding be successful, you will have to pay the non-refundable deposit on the spot at the auction. Therefore it is essential for you to visit the property you are interested in beforehand and be completely sure it is a property you wish to purchase, having had any surveys and searches completed prior to auction. You would also be well advised to get finance agreed in theory so that it is ready to put into place without any disappointments or complications. If you have never bought a property at auction before, it is a good idea to go to a few actions before you start your bidding.
Once you have found the property of your dreams you will need to make an offer and perhaps negotiate with the vendor. A 10% deposit will be required to secure the purchase and a Contract of Sale is drawn up. The deposit may or may not be refundable at the vendor's/buyer’s prior agreement depending on the State in which you buy. The contract will be subject to the satisfactory completion of all inspections and searches and once these have been completed correctly, the exchange of contracts takes place and the sale process is completed.
Costs will include legal fees, mortgage arrangement fees, stamp duty and taxes and you will need to produce an additional 5% of the purchase price to cover such expenses. The exact amount can vary according to state as well as the value of the property you are purchasing. For accurate figures, you will need to speak to your local agent or lawyer.
It is advisable to obtain professional advice about taxation issues before entering into any property transaction. There are various ways that overseas or offshore property investors can legitimately save tax and our taxation experts can help you with planning the most beneficial ways in which to do so.
There are certain main taxes applicable in purchasing Australian property, while others may also be applicable according to state:
GST is charged at a flat rate of 10% and is charged on the supply of goods and services, including real estate. It is essentially a value added tax as it is the consumer or end user who ultimately bears the tax.
Stamp duty is levied on a wide range of transactions, such as agreements for acquisitions of real estate, business and some marketable securities as well as leases and financing transactions. It is a state tax and is charged either at a fixed rate or on an increasing scale depending upon the value of the property.
This is an annual state tax based on the ownership of land and, in some states, on the usage
of land. Land tax is levied on the total unimproved value of the land at a specified date. The tax rates and thresholds vary from state to state and over time.
It often makes sense to have a full survey done on resale properties that you are interested in purchasing because buildings can be susceptible to damp and other problems such as termite infestation. If you’re applying locally for finance to make your purchase, many lenders require a survey to be carried out to their satisfaction before they lend the money.
If you possess property in your own country and would like to borrow against this in an equity release plan, we can introduce you to an independent financial advisor who will help you raise the necessary finance.
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