If you’ve decided to sell your property, you may be wondering whether costs such as stamp duty apply to you as a seller. Stamp duty is a levy on property transactions that is paid to the state government.
Who pays stamp duty when a property is sold?
The buyer is responsible for paying stamp duty in any property transaction. If the property is transferred as a gift, the receiving party will be liable to pay stamp duty. If you are selling property, you do not need to factor in the cost of stamp duty.
Stamp duty is generally paid at settlement – each state has its own regulations on the timeframe property buyers have to pay stamp duty.
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- New South Wales – buyers have up to three months to pay stamp duty after signing a contract of sale. Settlement cannot take place until stamp duty is paid.
- Victoria – buyers must pay stamp duty at settlement.
- Queensland – buyers must pay stamp duty within 14 days after the lodgement date of the relevant transfer agreements. (Queensland Revenue Office)
- Tasmania – stamp duty is payable within three months of the property transaction. (State Revenue Office of Tasmania)
- Northern Territory – buyers must pay stamp duty within 60 days of signing the contract. (Northern Territory Government)
- Australian Capital Territory – buyers must pay stamp duty within 14 days of the property title being registered at Access Canberra. (ACT Revenue Office)
- Western Australia – buyers must pay stamp duty within 1 month after a duties assessment notice is issued. The certificate of duty (required for transfer of land registration) will only be issued after duty has been paid. (Western Australian Government)
- South Australia – buyers must pay stamp duty at the time of settlement. (RevenueSA)
Property selling costs for owners & investors
While sellers are not liable for stamp duty, there are still other costs that may apply. It’s important to consider these costs before listing a property for sale, so you have a clear idea of how much to budget and what to expect in terms of overall return.
Capital gains tax (CGT)
Capital gains tax applies when selling a property that was used as an investment or as a rental property. CGT is a tax on the profit earned from the property sale, not the value of the property.
For example, a property that was originally bought at $550,000 and later sold at $800,000 will have earned a profit of $250,000 – this profit amount is subject to CGT and will be added to assessable income come tax time.
Some properties are exempt from CGT or may enjoy a discount when sold:
- A property listed as a seller’s primary residence (a family home) will be exempt from CGT.
- Properties that are owned for at least 12 months before being sold may be eligible for a 50% CGT discount, where only half the amount of the profit is added to taxable income. Only those who are considered an Australian resident for tax purposes are eligible for the 50% CGT discount.
Conveyancing fees
Conveyancing covers the legal aspect of the property transaction – the transfer of ownership between the seller and buyer. Both property sellers and buyers typically engage their own conveyancers to prepare the necessary paperwork and perform the final checks at settlement.
Working with a conveyancer is highly recommended for sellers as their expertise reduces unnecessary risks for the transaction and saves time on the preparation for settlement.
There are four main stages of the conveyancing process:
- Contract preparation – the conveyancer drafts a contract of sale before the property is listed.
- Exchange of contracts – the buyer’s offer is reviewed by the conveyancer to identify risks and make adjustments.
- Pre-settlement – the conveyancer calculates the final adjustment to the funds receivable based on council rates and water services.
- Settlement – the conveyancer facilitates the transfer of property ownership in exchange for the funds.
Average conveyancing fees in Australia range from $500 to $2,000, varying between states, property types, and regions.
Real estate agent fees
When selling a property, property owners often engage real estate agents to list the property on the market for potential buyers. Real estate agent fees are charged based on a commission structure – calculated as a percentage of the final sale price of the property.
Commission for real estate agents in Australia ranges between 1.5% to 3%. Taking the average at 2%, a property sold at $800,000 would incur a real estate agent fee of $16,000.
Real estate agents’ services are an essential part of selling a property, and include the creation and management of a marketing campaign, hosting open house events and inspections for prospective buyers, and responding to offers.
Property repairs and renovations
Before the property is listed for sale, it may require repairs or upgrades to get it into a good condition that appeals to buyers. A building inspection may reveal critical structural issues that must be addressed, or you may decide to renovate part of the property to increase its sale value. Sellers also have the option to engage property styling services to add furnishings that improve the look and feel of the home.
The costs of property maintenance and upgrade work can add up considerably, and it’s good practice to consider how the outcome of the sale will be impacted.
Final thoughts
In short, selling a property does not require vendors to pay stamp duty, but there are many other costs that sellers should factor in to ensure a positive sale outcome. Engaging a conveyancer early on in the property sale process can help you understand which costs apply.
As the leading conveyancers in Melbourne, Sydney, and Brisbane, Entry Conveyancing works on behalf of buyers and sellers to make the property transactions as simple as possible. With hundreds of successfully completed transactions Australia-wide, our conveyancers have a reliable track record locals can depend on. We charge fixed fees for our conveyancing services to ensure that you can plan your finances accurately.
