Stamp duty is one of the necessary evils that come along with purchasing a property. In some states stamp duty can be exceptionally high and completely put you off buying property. However, in others there are concessions and grants that can really help first home buyers. In those states where the cost of stamp duty is high, it can be worth looking at investing in property outside of your home state.
For a Western Australian house priced at $300,000 you can expect to pay around $8,835 in stamp duty if you are not a first home buyer. A similar property in South Australia will set you back $11,330. However, if you are a first home buyer and are eligible for the first home owner’s grant then in most states (excluding the Northern Territory, South Australia and Tasmania) you can expect a significant discount. A $300,000 property for a first home buyer won’t cost you anything in stamp duty (a massive saving). It’s important to note though that if you purely want to use the property for investment reasons, you may have to pay the stamp duty regardless of whether you’re a first home buyer.
So, is it worth investing in other states where the stamp duty and relevant concessions are more forgiving? Of course! Anyway you can reduce your costs will be beneficial. Even if you have to spend a few hundred dollars on plane tickets to inspect some properties, you’ll still end up ahead financially.
For most first home owners their biggest worry is how they are going to afford the mortgage, however it is important to account for stamp duty. It is an extra expense and if you are willing to call your property home for a little while before turning it into an investment property, you can save a lot of money.
It’s always best to check stamp duty concession eligibility rules with your state government to make sure you qualify for things like the first home owner grant. If you have any questions about your borrowing power and how you can calculate how much you need to save, talk to one of our Mortgage Brokers today.