If you’re wondering what taxes are required when buying a property in Perth, you’re in the right place.
The process of buying a home may be very stressful, and it’s a significant investment. It is not only the actual cost of the property you need to pay, but different taxes applied to it.
The more stressful aspect of purchasing a property is that you never know how much you are paying other than the actual price. If you are currently dealing with the same situation while buying property in Perth, we have your back!
Annual property tax rates
Are you planning to rent an apartment in Perth? Let’s analyse the annual property tax rates in Australia. According to PwC Australia, the annual tax rates are $400 plus 0.3% of unimproved land value. This rate is for owner-occupied land. On the other hand, for a residential property, the rate is $1500 plus 1.1% of unimproved land value.
Government fees when buying a house
We should move towards the other fees you must pay when buying a property in Perth. One of these fees is government fees.
Transfer registration fee, also known as “Stamp Duty”, is the type of tax directly levied by the current government. All associated costs in transferring the property to the buyer are included in the fee. Once the fee is paid, the process of transferring the property title will begin.
In Perth, the stamp duty depends on the market value directly. The greater the property’s market value, the higher the transfer fee. No transfer fee applies to properties worth $430,000 or less. However, property worth more than $430,000 in Western Australia has different ranges of stamp duties.
According to a stamp duty calculator and the Australian government, the WA stamp duty ranges from $1.90 per $100 or part thereof to $19,665 + $5.15 per $100 or part thereof above $500,000.
Mortgage registration fee
Another type of government fee is the Mortgage registration fee. The fee applies when you have borrowed a home loan from any bank to support your property purchase. The bank uses this mortgage for the security of the loan.
In simpler words, the bank uses the mortgage as a safety and security option. If you cannot pay your loan, the bank has the right to sell or own your property. The rules will be the same even if you have taken a loan from any other financial organisation. The possession, also known as Title Deed, will remain intact until you have repaid your loan.
The charges that the mortgage fee covers are the origination fee, application fee, underwriting fee, administrative, and processing fee. Other than this, another important payment that is required is called Points. The cost of borrowing money from a financial institution or bank is expressed in terms of points. This fee is paid upfront to the lending organisation or bank.
Mortgage registration is different throughout the states. Different states have different fees. For instance, the mortgage fee in NSW is $143.50; in VIC, it is $119.70, etc. For WA, the mortgage fee is $174.70, which will be applied to the property in Perth.
Mortgage discharge registration
Another type of fee is mortgage discharge registration. It is to clear the title of the property. Once your mortgage is discharged, the mortgage discharge registration fee is recorded.
Mortgage discharge is documentation that your lender provides. It is written proof that your previous mortgage has been paid off. The fee for this document is comparatively lower than the other fees.
Australia’s mortgage discharge registration fee ranges from $50 to $600. Once the fee has been paid, the property title can be transferred to the borrower completely, and the buyer can receive a duties assessment notice.
So, these were some taxes required when buying a property in Perth. In addition, you’ll have to pay for a few extras if you want to make use of our full range of services. For instance, a real estate fee will be applied if you are trying to buy a property by selling one.
You will need to pay the agent’s fee if you are seeking consultancy from a professional property agent in your settlement process. In addition, if you are a foreigner, you will also need to pay the foreign buyer’s duty.
Another type of fee is the lender’s mortgage insurance fee. In short, the more services you receive, the more you have to pay.
Common questions about property taxes in Perth
If you Googled “tax benefits of owning a home Australia”, this section is perfect for answering your queries. There are numerous questions people ask about taxes required when buying property in Perth and WA, such as, do you need a deposit to buy a house in Perth? So, here is a cheat sheet for all the frequently asked questions.
Q: Do I need to pay stamp duty when buying a house in WA?
As we explained above, the first home buyers do not need to pay any stamp duty if the property is worth $430,000 or less. However, the stamp duty is applied on property worth more than $430,000, depending directly on the property’s worth. However, a first-home buyer can get a discount on the stamp duty for a property value of $431,000 – $530,000.
Q: What fees are involved in buying a house in WA?
If you are buying land as an investment in Australia, understand the type of fees involved in the purchasing process. Purchasing a house in WA will include stamp duty, lender’s mortgage fees, removalist costs, council rates, etc. Other than this, some extra charges for building and pest inspection, conveyancing fees, buyer’s agent fees, house loan, and removalist fees can also include.
Q: How much is the stamp duty on buying land of 500k?
No simple definition can be offered for this scenario. Stamp duties are handled in a variety of ways depending on the jurisdiction. For instance, in the UK, the stamp duty on the first £500,000 is 0%. However, in WA, first-time buyers need to pay $13,433 stamp duty for a $500k house.
Q: Who pays stamp duty, the buyer or seller?
Stamp duty is not associated with the buyer or the seller but with the accountable person. Basically, whoever receives the property, either buyer or seller, will be responsible for paying the stamp duty. Multiple parties may be involved in the transfer process, and each party/person will be liable for stamp duty.
Q: Are stamp duty rates changing in 2022?
Western Australia’s budget for 2022-2023 made some changes to stamp duty rates. According to this budget, from 1st July 2022, a buyer will receive a complete transfer duty rebate. This refund only applies to homes worth less than $500,000, while a rebate of 50%-100% would apply to homes worth between $500,000-600,000. It is important to note that the worth of these homes is dwelling value.
Q: How can I avoid stamp duty?
There are many other tricks to avoid stamp duty; and those mentioned in our Western Australia home insurance guide are the most common ones.
One of the most common ways to avoid stamp duty is by buying a property worth less than $430,000. First, you can bargain with the seller about the purchase price and bring it to the level where the stamp fee is not applied. Second, you can claim back the stamp duty. Applying for a refund will help you in this situation.