Purchasing a property is usually a huge milestone in most people’s lives. Whether you are purchasing your first home, upgrading to a larger property or purchasing an investment property, buying a house is an extremely exciting time. However, during this time, it is important to realise that the purchase price is not going to be the only cost associated with securing your new property!
When budgeting for your property purchase, it is important to make sure you consider all financial aspects of the transaction. One of the key costs that is often overlooked by prospective buyers is Transfer Duty, which is more commonly known as ‘Stamp Duty’ (even though it hasn’t officially been called this for many years!).
Stamp Duty is a tax owing to the State Government’s Office of State Revenue on most ‘dutiable transactions’. A dutiable transaction includes purchasing a property or transferring an interest in a property, either from one person to another or into a separate entity (eg. transferring from a person to a Trust or Company). Stamp Duty is calculated based on the higher of the purchase price payable or the value of the property in the transaction, meaning that the amount payable can vary significantly. It also means that in many cases where you are receiving an interest in a property for free or at a discounted price, stamp duty will still be payable on the total value of the property.
You may be eligible for certain stamp duty concessions or exemptions, depending on your situation and whether you meet the specific criteria applicable. For example, first home buyers who are purchasing a property for under $500,000.00 may be eligible for the first home concession. This concession can only be accessed by a person that has never owned property anywhere in the world, who is purchasing the property as an individual (eg. not using a Trust or company).
Buyers who have owned a property previously but are purchasing the property in question as their primary residence, may be eligible for the home concession.
If you are purchasing a property in a Company or Trust, you will not receive the first home or home concession despite you living in the property and you will need to pay stamp duty at the highest rate.
Whilst purchasing a property is the most common scenario in which the obligation to pay stamp duty will arise, there are several other situations in which it may need to be paid. Check out our EL's recent video, 'Stamp Duty Explained', for more details regarding some of the other common scenarios in which stamp duty will be payable.
When you are thinking of purchasing your next home, don’t forget to consider how much Stamp Duty you will be payable in addition to the purchase price, how you are going to fund the payment of stamp duty (eg. if you are getting finance, will you need to add it to your loan) and what Concessions or Exemptions you may be able to apply for.
If you would like come clarification on what Stamp Duty you will be paying on the purchase of your next property, contact EL's Property Conveyancing team today:
☎️ | (07) 4646 2621✉️ | 🌐 | Property Conveyancing Services
On 20 January 2022, the Real Estate Institute of Queensland (REIQ) released new versions of the Contract for Houses and Residential Land (17th edition) and the Contract for Residential Lots in a Community Titles Scheme (13th edition).
The latest editions contain many amendments, but Enterprise Legal considers the following six changes to be the most significant:
Both Contracts now allow for a Seller to provide a No Pool Compliance Certificate to the Buyer prior to the Contract being signed and in doing so, there is no other requirement from the Seller in relation to the pool on the land. The Buyer will no longer have a termination right if the pool is not compliant at Settlement.
If however, the Seller does not disclose that there is not a Pool Compliance Certificate, prior to entering into the Contract, then the Seller will be required to obtain one prior to Settlement, at the Seller’s cost. If they fail to do so, the Buyer will have a right to terminate.
From 1 January 2022, dwellings and residential units offered for sale must have smoke alarms installed that comply with the current requirements – these requirements have been getting ‘phased in’ for a number of years now. The new versions of the Contracts specify that should a Seller fail to comply with these requirements prior to Settlement, the Buyer will be entitled to a deduction at Settlement equal to 0.15% of the Purchase Price. Sellers and real estate agents should be aware of this and consider whether it is more appropriate to include a Special Condition fixing this deduction at an amount that has bearing on the actual cost of making the residence compliant.
The new contract editions require Sellers to warrant, as at the Contract Date, they have not received any communication from an authority that may lead to the issue of a show cause notice, enforcement notice or notice to do work. This requirement is a lot broader than previous, which only required a Seller to make a disclosure if an actual notice had been issued. In reality, authorities such as Councils and service providers usually correspond with owners prior to issuing formal notices and this new requirement put the onus on Sellers to disclose any such correspondence.
Buyers now have a termination right is there is infrastructure that is unrelated to the delivery of services to the property that passes through the property and such service is not protected by a registered easement, BMS or statutory authority.
Buyers will also have a termination right if any service to the property passes through another property and such service is not protected by a registered easement, BMS or statutory authority.
This means that it is very important for Sellers to complete a ‘Dial Before You Dig’ or similar search prior to entering into the Contract, so that they are aware of the location of all services which may need to be disclosed.
This new concept allows either party to unilaterally extend Settlement by up to 5 Business Days after the Scheduled Settlement Date specified in the Contract.
This mechanism only applies to Settlement and does not apply to other conditions like the Finance or Building and Pest Condition.
The standard condition has been amended so that is a Seller does not advise the specific location for Settlement (e.g the specific law firm) at least 2 Business Days before the Settlement Date, Settlement will be required to take place at the Titles Office closest to where the land is located. Again, given the erroneous results this condition could result in, we recommend including a Special Condition to amend it.
There has been some significant changes made in the latest REIQ Contract updates for residential dwellings and units and it is important that parties understand what these mean and include appropriate Special Conditions to amend the Special Condition if required.
Firm Director, Peta Gray and Lead Conveyancer, Adrianna Williamson recently presented a Webinar regarding these changes and recommendations for dealing with those changes.
If you would like to receive a copy of the Webinar recording, or have any further questions about the changes and what that could mean for you, please contact our conveyancing team
☎️ | (07) 4646 2621✉️ |
Our team has also made a range of Special Conditions, including the ones referred to in this article, available for your use via the links below:
REIQ Contract for Houses & Residential Land (17th edition)
REIQ Contract for Residential Lots in a Community Titles Scheme (13th edition)
Often to get the best deal (or even to get the deal done at all) on a new property purchase, you will need to refinance your existing loans to a new bank. Seems simple yes? Well, when you refinance at the same time as purchasing a property, it adds a whole extra layer to your transaction and as such, there are some important things you need to keep in mind during the process.
As we (your lawyers) are acting for you in relation to your purchase transaction and not the refinance transaction, this means we have limited ability to drive the matter, as your old financier will not discuss the matter with us as we are not a party to the transaction. It is important that you and your Broker (if you have engaged one) ‘drives’ this matter by completing the relevant forms needed as soon as required and checking in to ensure both banks will be ready by the Settlement Date under you property contract.
Most of the time, you will be refinancing when purchasing a property which means that it will happen simultaneously (eg. at the same time) with the settlement of your property purchase on Settlement day. This means if your refinance is not ready due to either your old or new financier not being ready, then your purchase transaction will not be able to proceed, placing you in breach of your contract.
It is important to tell us from the start whether you are refinancing or not. As we don’t have the privilege to see how the refinance transaction is tracking, it is also important to keep us updated on how it is progressing. This also means letting us know what the outgoing (old) bank’s ‘payout figure’ is (eg. how much money you have to give them to leave), so we can ensure that your new loan covers not only the refinance with your outgoing bank but also your purchase transaction as well.
Between ourselves, you and your Broker, it is a collaborative effort to ensure your refinancing transaction and property transaction runs smoothly with no hiccups.
Ensure a smooth transaction and getEnterprise Legal's expert conveyancing team in your corner when you buy your next property by getting in touch with us today: