One of the primary attractions of purchasing a residential property investment is that you’re not limited to locations you actually want to live in.
You can buy a house or unit based purely on the property’s prospects as an investment, even if it’s hours away in another region, or a plane flight away in another state.
But depending on which state you want to purchase in, the fees and charges you’ll pay can vary significantly.
Remember, because you’re purchasing the property as an investment, you won’t have the benefit of first home buyer concessions, as you won’t be living in the property – at least in the short-term – so you’ll be hit with the full battery of costs.
For our comparison, we’ve used a property purchase price of $500,000, as many property experts suggest the prime range for investment lies between $400,000 and $600,000.
NSW
We can hear you already: “Where in Sydney can you buy a property for $500,000?”.
But these properties are around if you’re prepared to buy a studio or one bedroom property, or look a little further out of town.
And you’ll find that the costs of investing in Sydney are about the only part of the process that’s cheaper than the rest of the country, with Queensland the only state with lower fees. On a property worth $500,000, you’ll come out of it with fees of a little over $18,000.
Stamp duty – $17,990
Transfer fee – $138.30
Mortgage registration fee -$138.30
Total – $18,267
VIC
Buying a residential investment property in Victoria will see you hit with the highest purchase costs of any state in Australia.
On a $500,000 home you’ll pay more than $8000 more than an equivalently priced property in Sydney, though the property you’ll get for that money will likely be much closer to the city, as well as being larger.
For every additional $50,000 on the purchase price, you’ll add around $3000 to the applicable stamp duty, plus a slightly higher transfer fee.
Stamp duty – $25,070
Transfer fee – $1265
Mortgage registration fee – $114.90
Total – $26,449
Buying in Victoria can be pricey. Picture: realestate.com.au/buy
QLD
Queensland’s property market hasn’t experienced the same level of growth as New South Wales and Victoria, making investing an enticing proposition.
Pleasingly for those investors, buying in the sunshine state has the lowest fees in Australia, due largely to lower stamp duty costs.
Stamp duty – $15,925
Transfer fee – $1269
Mortgage registration fee – $181
Total – $17,375
Buying in Queensland generally involves much lower fees. Picture: realestate.com.au/buy
SA
South Australia doesn’t quite match Victoria when it comes to high overall costs of investing, but it’s right up there.
Where they really sting you is the transfer fee, which at $3897 on a $500,000 home is more than triple what you’ll pay in any other state.
And while in some states the transfer fee is a set rate, in South Australia it rises by about $402 for every $50,000 you add to the home’s purchase price.
Stamp duty – $21,330
Transfer fee – $3897
Mortgage registration fee – $160
Total – $25,387
WA
Western Australia’s property market has been seen as somewhat volatile, but those willing to dive in will enjoy comparatively low duties and fees.
WA trails only Queensland for low stamp duty costs, while transfer fees increase only fractionally as the price of the property rises.
Stamp duty – $17,765
Transfer fee – $258.70
Mortgage registration fee – $168.70
Total – $18,192
TAS
Costs are also kept down in Tasmania, due in large part to some of the fees being locked in at low rates, no matter what the property is worth.
Happily for buyers, the transfer fee is set at $203.05 for all properties.
This means that once a property’s price hits around $800,000, Tasmania’s costs become the cheapest in the country.
Stamp duty – $18,247
Transfer fee – $203.05
Mortgage registration fee – $132.52
Total – $18,583
Other considerations
Depending on the state in which you buy your investment property, as well as the type and size of the property itself, you’ll most likely also be charged annual land tax.
Land tax thresholds vary markedly from state to state, and are charged based on the size of the land on which the property sits.
However, if your investment is a unit, you’ll only be charged a portion of the total land tax, based on how many apartments or units are on the land. It pays to check your potential land tax rates before making a purchase.
