SXY For Sale in Australia
| €198.050 (approx £137.534) | |||||||||||||
Legal and taxesTypical Costs and Processes of Purchasing an Investment Property in AustraliaCan non-residents live in Australia?: Yes, the Australian government actively promote the purchase of investment property by off shore investors. Non-residents can buy residential property, but they do require approval from the FIRB (Foreign Investment Review Board). Investors can check out the exact requirements at www.firb.gov.au Dia Soleado Invest ensures that all developments we market conform to FIRB requirements and most projects are already pre-approved by the FIRB for non-resident purchases. Taxation in Australia: Rental income is a taxable income and once your property is produces an income you will need to submit an Australian tax return. Whilst rent is a taxable income, many of the cost relating to holding an investment property are tax deductible. These include cash costs such as body corporate costs, council rates, management fees and interest if you are funding the property, as well as non-cash items such as depreciation. Depending on the property, the rental income and the costs that you have, many investors will not pay tax for many years. To assist you with your Australian tax return Dia Soleado Invest can arrange for a local taxation accountant to prepare the required returns that can be forwarded to your local accountant. Australia also has stamp duty, land tax and capital gains tax. Investors can find further details at the web site of the Australian tax Office www.ato.gov.au Buying Off-Plan: Many investors are choosing to purchase their investments “off the plan”. In Australia buying “off plan” usually requires 10% of the purchase price as a cash deposit, this should remain in a solicitors’ trust account and not be accessible by the developer until project completion. Purchasers need to check their contracts prior to signing to ensure this is the case. There is then typically no more to pay until the project is fully complete and ready to occupy. Please note, in some states in Australia stamp duty on the purchase may be payable prior to the property completing. The “buying off the plan” practice allows investors to get involved in a project early on and lock in the current price in hope that by the time the project completes it will already have had some capital growth. Australian Mortgages: Some international investors are able to use their local lenders and these lenders will use the Australian property as the security. However, many investors require a loan from an Australian lender. Australia has many banks and non-bank lenders and many will lend to international investors. Lenders will generally take rental income (or projected rental income for new projects) in to account, however, most will require evidence of other income the purchaser has. Most lenders will lend to a maximum of 80% of the value of the property. Generally lenders prefer property that is above 50sqm internally and is below will generally still provide funds, but often not up to 80%. Some lenders will lend 60% of the evaluation without any proof of other income. Loan products and rates are generally the same as those available for local investors. Loans are generally available for up to 30 years and are available on a principle and interest or interest only basis. The General Purchasing Process Most projects require an initial holding deposit once you have selected the particular property that you intend to purchase. This hold deposit is usually between AUD$1.000 & $5.000, is usually refundable should you have a change of mind prior to signing the contracts, and is usually held in a trust account. Once a holding deposit is received the vendor’s solicitor will prepare a contract of sale. This is usually a few days after the holding deposit has been sent. We strongly suggest to all of our clients that they use the services of a local Australian solicitor who is independent of the developer and the developer’s solicitor and who solely represents the purchaser. It is important to have legal representation in the geographic area in which you are purchasing to ensure that the particular legal requirements for the locality are being met. The contract, once prepared, is sent to the purchaser’s solicitor. The in turn review the contract, suggest and negotiate any changes that they feel are in your best interests and forward the contract to you, with their covering notes. The general time frame that most of our developers agree to (for the off plan projects) for international purchasers is to allow 21 days from contract issue to have contracts signed and returned and up to a further 21 days to transfer a 10% deposit. Once the purchaser and the vendor, with no outstanding conditions, have signed the contract and the 10% deposit has been paid it is considered to be “unconditional”. This 10% is generally held in a trust account by the developer’s solicitor. It is important to ensure that the 10% is held in trust and is not available to the vendor until the project is complete. This will be specified in the contract. Several months prior to settlement your solicitor will contact you top prepare for settlement. It is important at this time to: • Organize a pre-settlement inspection. You can do this yourself, though we suggest that in addition you use the services of an independent builder to inspect your property on your behalf. This service is readily available and at a cost of under AUD$400 to inspect, report and then re inspect after any defects have been fixed it offers excellent value to protect your new asset. • Organize an Australian bank account. If you are borrowing funds in Australia you can organize this with the same lender. In any case, you will require a local account to have the rent paid into. • Organize a local property management agency to manage your investment. Some investments already have this facility in place, such as serviced apartments. Typical Purchasing Costs Include: As a general guide you should allow for the following costs at (or before) settlement: Legal Fees: AUD$1.000 to $1.400 Stamp Duty: This is a state based tax and varies depending on the property price. An AUD$4000.000 property, purchased in Darwin would have a stamp duty of around AUD$19.000, in Sydney AUD$13.900, in Brisbane AUD$12.475, in Melbourne AUD$19.600. Please note that in Victoria (Melbourne) stamp duty is calculated on the value of the property at time of purchase, so a purchase “off plan” before the property has been built can result in a stamp duty charge which is often as little as 10% of what the stamp duty would be if purchased once complete. Loan Arrangement Fees (if borrowing in AUS): AUD$450 to $650 Loan Stamp Duty: Generally around 0.4% of the amount borrowed. Pre-Settlement Inspection: AUD$400 | |||||||||||||
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