Last year the rules regarding payment of 'stamp duty' were changed in relation to 'off-the-plan' apartment purchases - instead of the stamp duty ($42,000 in the case of the $1m apartment I'm buying) being due when the construction is completed (in mid 2023) I had to pay the stamp duty within three months of 'exchange of contracts' (when I paid the $100,000 'deposit'). If the development isn't completed (so 'settlement' never happens) I'll have to get the stamp duty refunded by the state government. But if the development isn't completed I'll have the bigger problem of trying to get my deposit back from the developer...
Hopefully the unit will be completed on schedule, and I can get a mortgage for the balance of the purchase price at that time - which will be a lot easier if property prices rise over the next three years (which will make the LVR lower). Real estate prices in Sydney bottomed out in the early part of 2019, and had started rising again quite strongly again during the second part of 2019, driven by interest rate cuts and pent-up demand (population increase due to immigration). Prices are still below the previous peak and some commentators have predicted a rise of 15% during 2020, followed by a few years of more typical 5% annual growth in Sydney real estate prices. Overall my $1m apartment could be 'worth' up to $1.25m by the time I get it valued for a mortgage application in early 2023. Only time will tell...
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1 comment:
I think if something happens to the $1mln investment, loss of the stamp duty will not be that visible.
Of course government always want to get their money first. The question I have is - why property? What is the expected return? Do you want to flip it or manage it yourself by renting out?
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