stamp duty

Assistance to Foreign Property Buyers

Assistance to Foreign Property Buyers.

SA Listings has recently assisted a number of foreign buyers successfully purchase property in South Australia. It is essential, as a foreign purchaser considering a property purchase in Australia, you understand the complex rules surrounding the transaction. SA Listings offers a Buyers Agent Service to guide you through the process, assisting with government approvals, property selection, finance approvals, contracts and finally settlement on your new Australian property. We are also able to assist with finding tenants through our experienced property management partners.

In general, foreigners buyers are only permitted to purchase properties in Australia that are either new or under construction and each individual purchase transaction must be approved by the Foreign Investment Review Board (FIRB).

Who needs FIRB approval?

Essentially, if you are not an Australian citizen or are a temporary resident on a visa living in Australia, you may need to seek FIRB approval for a property purchase. SA Listings can assist you with achieving FIRB approval, contact us for a discussion of your individual circumstances.

Taxation and property purchase costs

There are other costs associated with purchasing property in Australia. As with most other countries, stamp duty is payable on the transaction. Additionally, as a foreign purchaser, with any transaction in South Australia you now must pay a ‘Foreign Owner Surcharge’ amounting to an additional 7% of the purchase price on top of normal stamp duty. SA Listings can assist in helping you choose the right property to minimise any additional costs.

There are also a number of other costs attached to a property purchase which must be considered, including legal & conveyancing fees, loan application fees, insurance cover and pro-rata adjustments for council or water rates, and building or pest inspection fees. Additionally, in South Australia, to complete any real estate transaction a conveyancer or solicitor must be engaged to carry out the actual process of the transfer of title.

Buyer’s Agent Service

As with any property investment, it is essential the correct property is chosen in order to achieve the best return on investment. SA Listings can assist your decision through our Buyers Agent Service – of course there is no obligation or cost for any initial discussion.

We have successfully helped a number of foreign buyers navigate the purchase process – we can do the same for you. Contact us for more information.

Justine Thomson

National Property Statistics

Adelaide property values have recorded a modest increase of 0.1% during the month of November, according to the latest CoreLogic Home Value Index released today, Monday December 3, 2018. This small increase contributes to an annual return of 1.4%. While this small increase may not be music to the ears of property investors and owners, it certainly is sounding better than Sydney and Melbourne, both continuing their pull back with -1.4% and -1.0% respectively.

Source: Corelogic.com.au

As always, please be in contact should you need assistance with any property matter.

If interested in an individual property appraisal or statistics on your suburb or local area, please be in contact through SA Listings.

Justine

Land Title in South Australia

When buying property in South Australia, be it purchasing land, a house, investment property or even an apartment, you are purchasing a “title” specific to the parcel of land or property which determines the type of ownership. Essentially, the main difference between the types of “titles” is whether or not the land is “shared” or owned in “common” with other owners. There are two main titles in South Australia, Torrens and community.

Torrens Title. A South Australian invention, Torrens title is a system which records and registers land ownership. Your name is “registered” on the Torrens title register when the Certificate of Title is lodged at the Lands Titles Office. You then become the owner of the property to the exclusion of all others.

This means that you, as the property owner, are responsible for everything within and related to, your property. You are wholly responsible for council rates, services of water, sewerage, storm water and any land tax applicable on the land. This title is particularly relevant to free-standing homes and some townhouses.

Community Title. This an updated version of the older strata title, meaning that you own your block of land (or apartment) but you share aspects as a “community” i.e. responsibility of common areas is shared with other owners. While strata title is still relevant for existing titles, all new common allotments are now community titled.

A property such as a villa, townhouse or unit is often purchased under community title. When you buy one of these properties, there are ‘common areas’ (driveways, gardens, entryways and so on) used by all of the people living in the development or apartment block. These common areas have to be maintained by all of the unit owners collectively, through a community corporation, because they are shared. The individual owner is responsible for upkeep of the inside of their land and property, but they must share the expense of maintaining common areas.

Your lot entitlement (in simple terms the proportional size of your property compared to the entire property) determines your share you contribute to insurance and other fees charged by the corporation. All community schemes have by-laws that include provision for the administration, management and regulation of the use and enjoyment of the common property. The by-laws are an extremely important aspect of community title new purchasers must be aware of – how much are the fees and what rules exist that you must abide by. For example, many community corporations restrict pets to certain sizes or numbers.

Moiety Title. Now rare and sometimes referred to as a cross lease, moiety ownership of a property comes from being the registered owner of a share of the land the property sits on. The owner then leases the right to occupy their property, along with the right to use common areas, from the other unit owners. It is now common for moiety title to be transferred to either community or Torrens title.

Should you have any questions regarding the title of your land or apartment, or are considering purchasing a property and are unsure of the responsibilities that come with the title, please be in contact at info@salistings.com.au.

Justine

1 July Property Legislation Update

Well we are a few weeks into the new financial year and, as is usual, property owners and investors should be aware of various changes to property rules from the ATO.

Australia wide, the greatest and possibly the one with the biggest impact on investors, new home buyers and developers is the requirement for purchasers of new residential premises or potential residential land to withhold an amount of the contract price and pay this directly to the ATO at settlement.

Essentially, this means for affected property transactions, purchasers will need to:

split the amount of GST from the total purchase price,
pay the GST component directly to the ATO by a disbursement at settlement, and
pay the GST exclusive purchase price to the property developer (vendor).

The new rule imposes requirements onto the vendor/developer as well. Developers need to give written notification to the purchasers when they need to withhold.

The actual liability for the GST remains with the property developer, however there are no changes to how property developers lodge their business activity statements.

Should you be contemplating purchasing new residential property or potential residential land there are a number of forms that need to be completed by the purchaser or their representative (a conveyancer or solicitor) after contract signing and prior to settlement. Speak to your agent or conveyancer to ensure you comply with the new requirements or visit https://bit.ly/2tLbVri for more information from the ATO.

1 July 2018 also marks the date from which first home buyers can access super contributions for the purpose of buying their first home. Since 1 July 2017 eligible Australians have been able to make voluntary super contributions of up to $15,000 a year, to a maximum of $30,000 over more than one year, to their superannuation account to help purchase their first home. Since 1 July 2018, eligible Australians are able to apply to their super funds to release these contributions (and earnings) for the purposes of purchasing a first home.

Finally, another change on 1 July 2018: Australians aged 65 years + can make a non-concessional (after-tax) contribution into their super account of up to $300,000 from the sale proceeds of their family home (main residence) if they have owned the property for at least 10 years. Couples will be able to contribute up to $300,000 each, giving a total contribution of up to $600,000.

Again, please visit the ATO website https://bit.ly/2udPt9Jor discuss with your financial advisor for detailed information related to your particular circumstances.

Justine Thomson

Top Tips for First Home Buyers

To assist First Home Buyers get a step up on the property ladder, there are a few incentives you need to be aware of. To help assist, SA Listings has compiled this go to “Top Tips” for first home buyers looking to purchase in SA.

Top Tips Towards Home Ownership

First Home Super Saver Scheme: You can make contributions to your super account from your before tax pay to save for a house deposit. You are limited to $30,000 per person and capped at $15,000 per year. If you are self employed or your employer does not allow you to do salary sacrifice, you can claim a tax deduction on the after-tax contributions. To find out more, contact your Superannuation Fund direct.

Stamp Duty Savings: There are a couple of ways you can save on shelling out too much stamp duty! The SA Government allows for a stamp duty concession if you purchase an apartment off the plan anywhere in SA. What does “off the plan” mean? This means it is a new building that is yet to be constructed or it is a new building for which construction has commenced and the Commissioner is satisfied the work has not been substantially completed or it is an existing building where the Commissioner is satisfied that the building is to be substantially refurbished and the work has not yet commenced or has not been substantially completed.

The amount of stamp duty concession that applies depends on two things:

What stage the construction is at from the date you enter the contract and
What the market value of the apartment is that you purchase.

To calculate how much stamp duty you need to pay for an “off-the-plan” apartment, there is a great calculator available on the Revenue SA website: Stamp Duty Calculator

Another way to save on stamp duty is to build. By purchasing a block of land and then building, you only pay stamp duty on the land, saving you considerable money. This additional money can be put towards the build rather than to State Government coffers. For example, if you buy a block of land for $150,000 and build a home for $200,000, you will only pay stamp duty on the land only. At current rates the stamp duty on $150,000 would be $4,830. If you had purchased an established home at $350,000 the stamp duty would be $13,830. This is a saving of $9,000! As a first home buyer this is a considerable amount of savings.

First Home Owners Grant (FHOG): The FHOG is a once of grant paid to eligible first home buyers on the purchase of a new build or construction of a new home. To be eligible for the grant the market value of the property purchased must be $575,000 or less. The amount of the FHOG is $15,000. If you purchase a newly built home, the grant is paid on settlement, if you construct a new build the grant is paid on date of first progress payment.

Pre-construction Grant for “Off-The-Plan” Apartment Purchases: For contracts of “off-the-plan” apartments entered into between 20 June 2017 and 30 September 2017 the State Government is currently offering a $10,000 pre-construction grant.

Savings: Don’t forget good old fashion savings. By saving a few dollars everyday, this can go a long way towards your first home deposit!

At SA Listings we know it is tough for first home buyers to dip their toe onto the property ladder but with sound knowledge and a good understanding of managing your money, the dream can be a reality! We hope this blog assists all those aspiring first home owners and should you have any questions, please send us an email or message us on facebook and we would be happy to help.

Justine Thomson

Please note: Information provided in this blog is current as at date of going to print

SA Homes Top Ten Wish List

I thought with 2016 recently ending and the New Year ringing in, it is an apt time to review the most common search words buyers use when seeking a property in SA, to assist any would be seller in 2017.

Many will be surprised pool is the number one search word when seeking properties in SA. For all those lucky enough to have a pool, the cost to run, maintenance and amount of times utilised often outweigh the benefits a pool can bring but at sale time this can be a bonus. A pool can be an attractive garden feature and for families a must have in our dry, hot summers. If your kids have flown the coop and you are thinking of ditching the pool, think twice, especially if you have plans to one day sell your home and downsize.

The old fashion granny flat is back in vogue! Statistics prove our kids are staying at home much longer these days and often do not consider leaving the family abode until in their late twenties or early thirties, sigh…. Grandparents are also becoming a part of the extended family, assuming a carers role for children when both parents work. To give extended adult families breathing space it is little wonder the granny flat is a highly sought after commodity. If you are fortunate enough to have a granny flat and are considering taking your home to market, it would be worth spending some coin on reinvigorating life into this space. If used as storage, clear out the boxes, de-clutter and style as you would a second home.

The corner block has always been a sought after find in SA but even more so since the State Government zoning changes. If you fall into the new zoning categories for higher density living, the corner block can be correlated to the golden goose who lays the golden eggs. Make sure you check with your council for current zoning requirements before putting your home on the market. The right zoning can add tens of thousands to your sale price. A good agent should be aware of the possibilities in your area when it comes to potential development or subdivision and should factor this into the market price.

Top Ten Property Search Words in SA

Pool
Granny Flat
Corner
Views
Beach
Shed
Esplanade
Cottage
Character
Investment

To maximise the return on your property consider the top ten search words and ensure your Agent takes full advantage of known characteristics your home has in meeting buyer needs.

If considering selling your home in 2017, we would love to hear from you and assist you in making the most of your properties attributes: salistings.com.au

Justine Thomson

Build or Buy Established?

A common question often considered by first home buyers, families and people down sizing is whether to build a home or buy an established property. Being a Real Estate Agent I have been asked this question many times. In fact, our Plasterer Nev, who is working on our current renovation asked me this question only the other day. The answer to this question is not like a maths question, there is no right or wrong, it all comes down to your individual circumstances. To assist here are some important tips to know.

Stamp Duty

This is a State Government tax paid on the purchase price of a property. The Government call this a duty but it really is another tax! It is a progressive tax. What this means, is the higher the purchase price the higher the stamp duty. If you were to purchase a residential home for $350,000 the stamp duty would be $13,830, this is 3.95% of the purchase price and if the residential home is purchased at $600,000 stamp duty would be $26,830, this is 4.47% of the purchase price. The higher the purchase price the higher the stamp duty. Now here is the trick, if you buy land only and then build, you only pay stamp duty on the land price. This can save you considerable duty and the additional funds saved can add value to the build! For example, if you are a first home buyer and you decide to build and let’s say the land is priced at $150,000 and the build at $200,000, you only pay duty on the land, totalling $4,830. This is a huge saving of $9,000 from purchasing an established residential home at $350,000.

At present, stamp duty exemptions for apartments purchased off plan are also available. You can find out more about these exemptions by referring to the Revenue SA website.

To calculate stamp duty payable on a property, there is a Stamp Duty Calculator available on the SA Listings website, refer http://www.salistings.com.au/stamp-duty-calculator

Let’s hope one day, the State Government will reconsider the imposition of stamp duty for all home buyers and implement a fairer system for all. Some would call me an optimist!

Government Grants in SA

There really is little on offer by the Government in regard to grant money to assist with purchasing a home unless you are a first home buyer.

First Home Buyers Grant: If you are an eligible first home buyer in SA and purchase a new home, a new home is defined as a home that has not been occupied or sold as a place of residence and the market value of the property is $575,000 or less, you may be eligible for the $15,000 First Home Buyers Grant. If you combine the First Home Buyers Grant with the potential stamp duty saving on a new build, this can be a considerable amount of money saved.

To find out more about available grant money and eligibility requirements, refer to the Revenue SA website.

Your Needs & Budget

An important consideration when purchasing any property is your budget. If you are considering building, ensure you have a fixed price contract, often builders will include provisional amounts for unknowns such as footings. Ensure you factor into your build budget a contingency amount for these provisional sum items and for any changes you may make along the way. Don’t forget additional items outside the build contract such as soft furnishings and landscaping.

When you buy an established property you know the purchase price and it is easier to manage the budget, however, maintenance and renovation items should be factored in.

When you build, you can choose exactly what meets your needs. Size of rooms, design of the home, type of build materials and overall style. When you purchase an established home, you often have to sacrifice some of your needs as it can be difficult to find a home that exactly meets your style, taste and size requirements. A rule of thumb is, if you have been searching for your dream home for longer than 12 months then it probably doesn’t exist on planet earth and you will need to create and build it.

Alternatively, you could buy an established home that doesn’t exactly meet your needs but with some renovation will. Buyer beware though, renovations can be painful to live through and can also blow the budget! We have been renovating a heritage villa for four years now and the budget versus actuals correlates with the changes to Elvis’s appearance over the years – from healthy and fit to sad and big.

The Unknown

When you build, there can often be fear of the unknown. How you imagined the home to be is not the reality of the build. To overcome this, it is important you have a great rapport with your builder who can visualise the working drawings.

Buying an established property, you know exactly what you are getting, especially if you splash the cash for a thorough build inspection. I highly recommend Chris Short in Adelaide for anyone requiring a build inspection.

Build or Buy?

If you consider each item in this article it should assist in answering the question for you. Having lived through three builds and three renovations, hands down for me, the build was much easier and more cost effective for us. On the flip side, the satisfaction achieved from renovating in conjunction with the ability to purchase a home with history cannot be underestimated.

Justine Thomson

Mum and Dad Home Loans

Christmas is fast approaching and we all appreciate the little gifts we receive from loved ones but is helping your adult child buy their first home a help or a hindrance?

It is not difficult to understand why adult children are turning to their parents for a step up on the property ladder. In a Parliamentary report titled, “Out of reach? The Australian housing affordability challenge” (8^th May 2015), there are some shocking statistics. Up until 2001 annual income grew in line with housing prices, since 2001 the growth in property values has dramatically outstripped growth in household incomes. NATSEM [National Centre for Social and Economic Modelling] data shows that house prices increased by 147 per cent compared to income growth of just 57 per cent between 2001 and 2011. In dollar terms, the median price of a house more than doubled from $169,000 to $417,500 while after tax income increased from just $36,000 to $57,000. Whereas in 2001 an average home price in Australia was 4.7 times the average income, by 2011 this had increased to 7.3 times.

This graph below (source: Master Builders Association), highlights the housing affordability issue in Australia.

The Housing Affordability Ratio is measured by dividing the median house price by the median income of the house purchaser. A ratio of 5 or less, below the green line, is considered affordable, a ratio of 7 or more, above the purple line is severely unaffordable. This horrific statistic can provide some insight as to why parents are assisting adult children fund their first home. Question is, should we be?

This can be a very difficult question to answer. Prior to gifting money to your adult child, funding their deposit or going guarantor on a loan, make sure you consider the following:

Will you have enough money to fund your own retirement if you assist your children?
If you go guarantor on the loan and your adult child’s circumstances change and they can no longer fund the mortgage repayments. Will you be able to meet these repayments? If not, there could be serious consequences for your own financial stability.
Should your adult child be in a relationship and live with their partner and things turn sour resulting in a relationship break up, watch the can of worms open up! If you paid the deposit or funded the home, the law may see it as a gift and the ex-partner walks away with half or more! Alternatively, if you are guarantor on the loan: What are the financial implications with the split?
Have you taught your adult child how to manage their finances on their own? If you are generous and assist them with their first home purchase they may not appreciate the value of a dollar. The best lesson in life when it comes to financial savings is delayed gratification. What you need to give up now to get something in the future can be a great value to instil in your child. If it is out of reach, then maybe it should never have been!
If the bank will not loan the funds to your adult child, the risk must be high. If you guarantor the loan you take on this risk.
Is your adult child willing to make sacrifices to invest in property? When I talk of sacrifices, I refer to their willingness to purchase in an affordable area that may be many kilometres from the city and to also manage their spending carefully.

This is not an exhaustive list but it does provide food for thought. If you do decide to assist your adult child it would be a good idea to ensure agreements are in writing and clearly understood. Life can often change course when we least expect it.

I have an adult child, still studying at University and living at home and understand the difficulty in wanting to provide for their financial future. Maybe times are changing and the reality of home ownership in Australia is now only a dream. Long term leases could pave the way for our kids into the future, so maybe you should be the one investing in another property!

Justine Thomson

The Great SA Property Rip Off

The headline may have caught your attention but this will catch your attention even more. I have calculated stamp duty payable across all states based on the July 2016 Adelaide median residential house price of $445,000.00 and the results will surprise:

QLD: $0

WA: $2,878

VIC: $9,335

ACT: $11,260

NSW: $15,515

TAS: $15,910

SA: $18,580

NT: $19,688

The calculations assume the property is an established residential Torrens Title home purchased to live in.

Effectively, South Aussies are paying 4.18% in additional tax on a $445,000 residential home to live in, compared to their QLD counterparts who pay zip, zilch, nothing! And we pity our poor NT cousins who are ahead of us at 4.42%. I call it a tax because it is. The State Government aptly see it as our “fellow duty” to help out the State Administration to fund the coffers. The differential of the transfer fee between SA and the States is also worth noting but I don’t want to depress you even further.

Stamp duty in SA is a barrier for first home buyers trying to claw the end of their fingernail on the property ladder. Some available options for residential stamp duty relief is to purchase an off the plan apartment or buy land and build.

Over recent years we have had some reforms in residential stamp duty relief with off the plan apartments but is this the right way to go? A policy providing stamp duty relief for off the plan apartments will inevitably increase the supply of apartments under construction but will there be enough demand from South Aussies to live in apartments? We still have a good supply of land available North, South and in the Adelaide hills to support our current population growth. We are not yet Hong Kong with limited land supply and large capital values. The concern with current policy is apartment supply will outstrip demand and basic economics suggests this will have a negative impact on apartment prices.

It would only seem fair to spread the love of stamp duty relief across all types of residential purchases. Alternatively, we can all move to QLD!

Justine Thomson